Your biweekly update on edible oils & fats by Aveno.
Bi weekly dd August 18th 2025. 

Dynamic markets.

Lately, generally, edible oil prices remained firm. Palm oil prices rose mainly due to continued strong global import demand, fueled by improved price competitiveness compared to rival alternatives. Soybean oil prices remained supported by the outlook for strong demand for raw materials from the biofuel sector in North and South America, while sunflower oil prices remained stable due to seasonal tight supplies in the Black Sea region ahead of the new harvest. But global rapeseed oil prices retreated mainly under pressure from the arrival of the new harvest in EU and uncertainty on international demand for Canadian seed, meal and oil in light of “boycotts” from the US and China.

Lots of changes

Never a dull day in the edible vegetable and animal oils and fats markets! Even in the vacation period lots of exciting and interesting announcements and developments keep popping up, here and there and everywhere. All with the potential to send markets either up or down.

In the US, an increasing number of voices are opposing the EPA proposal to reduce incentives for imported biofuels and biofuels feedstock. Soybean farmers support the move to boost domestic production but the petroleum industry argues against the proposal, stating the US needs imports to meet federal quotas and prevent price increases. The American Petroleum Institute is pushing for the proposal to be completely withdrawn. The uncertainty about this proposal will probably last till November and the final ruling will be crucial for price and trade flow developments (soy, corn, tallow, rape, palm, UCO) around the US biodiesel program.

India, the world’s biggest importer of edible oils and fats (abt. 60% of its annual consumption), announced plans, under its National Edible Oils Mission, to expand its palm plantation area from about 370,000 ha today to 1Mha by 2026 and increase crude palm oil production to 2.8Mmt by 2029-30.

In Brazil, Grupo Potencial invests $393M in Lapa to develop the world’s largest biofuels complex which includes building a soybean crushing facility and expanding the existing biodiesel plant. Further in Brazil, the Brazilian Association of Vegetable Oil Industries (Abiove) said the industry already announced investments for 37 new soybean crushing facilities and 27 biodiesel plants!

Starting August 1st, Argentinian President Javier Milei announced a reduction in export taxes for various agricultural products: for soybeans a drop from 33% to 26%, and on soybean byproducts from 31% to 24.5%. Recent economic achievements enable the permanent duty relief for producers, which should help Agri-powerhouse Argentina to further feed the world.

EU and Indonesia hope to sign in September a free trade deal, set to begin in 2026, which would include a zero-import tax on 1Mmt of crude palm oil (3% tariff on volume exceeding the quota). Indonesia is also planning to increase their palm oil-based biodiesel mandate from B40 to B50 in 2026. The nationwide B50 rollout depends on sufficient subsidy funds (= higher palm oil export levies to secure biodiesel program subsidies) and additional production capacity and could take up to 4.25Mmt of crude palm oil out of the global market.

There is a worldwide growing concern about the oversupply of oilseed meals coming from the growing processing of oilseeds to satisfy a growing oil demand mainly driven by biodiesel policies. This amidst a sluggish meat consumption. Low meal prices pressure crush margins and in China, soybean crush margins have been negative since May. As demand for oil is stronger than demand for meal, it could be interesting to switch from growing beans to growing soft seeds with a higher oil content or other more profitable crops. However, agronomics must allow this. Argentina could switch to sunflower seed or the US could grow more rapeseed but the whole supply chain needs to adapt and soybean crushing capacity would need to convert to soft seed crush and this takes time. Longer term though, rapeseed and sunflower seed production could grow at the expense of soybeans.

The economy

Amid continuing tariff uncertainties there is much debate about the economic situation in major economies: consumer confidence, employment figures, whether the economy is contracting, whether there is inflation, and whether monetary stimulus (a reduction in the policy interest rate) is necessary.

Macroeconomic fears resurfaced following worrying employment figures in the US and the American import tariffs impact. In EU the industry suffers from the new US tariffs, high energy costs, and climate policies. Recent economic data from China, a major consumer of edible oils and biggest importer of petroleum, pointed to slowing economic growth due to trade barriers, weak domestic demand, and weather. In July, demand for financing in China fell to its lowest level in 20 years as businesses and consumers focus on repaying debts rather than taking new loans to spend or invest.

Petroleum

Palm oil

Palm oil prices rose to their highest in four months, driven by excellent Malaysian exports since the beginning of the month. Cargo Surveyors said that Malaysian exports in the first 10 days of august rose by more than 20% vs. July.

India is expected to buy more palm as is China and in Indonesia the biodiesel program remains strongly supported by the government. But Malaysian end of month stocks in July rose to a near two years high and production was at its highest since September ’24 which could temper over enthusiasm.

Soybean oil

Since beginning of August, soybean oil, in the US, corrected from an overbought situation on profit taking. This was supported by higher meal prices as meal supplies tightened temporarily, due to the annual maintenance shutdown of many crushing plants ahead of the new crop.

It is important to realize the price differences of soybean oil in different markets: FOB Argentina crude soybean oil quoted last week at $1085/mt, FOB Brazil at $1115, FOB Gulf of America or Mexico at $1210 and FOB Dutch Mill at $1320. US soybean oil is not competitive in the export market. The biofuel and trade policies of the US are ‘artificially supporting’ domestic prices and changes in policies may result in price changes.

The US crop is in good condition with a record yield expected but isn't yet in the bin. In addition, the last USDA's WASDE and Crop Production reports from August 12th had some surprises. For soybeans, despite an increase in yield from 52.5 to 53.6 bushels/acre, production decreased from 4.335 billion bushels to 4.292 billion bushels due to a drop of 2.4M harvested acres. Domestic soybean production was thus lowered by 1.2Mmt (116.8 compared to 118.8 last year). On which news the soybean futures jumped up on the Chicago Board of Trade.

But without China, it remains to be seen whether this situation is sustainable, and the risk of a prolonged absence of Chinese buyers is real. China has reduced its dependency on US agricultural products since the trade war during President Trump's first term. Last year, it imported around 105Mmt of soybeans, only 22Mmt of which came from the US.

China already made significant purchases of beans and has completed its cargo bookings for September, with approximately 8Mmt, all from South America. For October, Chinese buyers secured about 4Mmt or half their projected needs, also from South America. Brazil, the leading soybean exporter, has replaced the US as the preferred supplier. However, China also booked its first shipment of soybeans from Argentina in July and has reportedly purchased additional shipments since then.

US tariffs on China have been postponed for an additional 90 days, until November 10, but it appears that negotiators will not meet again for another two to three months, meaning it might be too late. We can only speculate what happens then, especially has there are enough beans around in South America.

Rapeseed oil

The drop of the Chicago soybean complex pressured all oilseeds but end July, rapeseed prices were still supported by the declining euro/dollar exchange rate and rising Canadian rapeseed prices, as well as disappointing harvest news from Ukraine. Following strong exports and very low end-of-season stocks, Canadian rapeseed maintained its strong upward momentum, supporting EU prices. Improved weather conditions in the Canadian Prairies arrived a bit too late, and production there is expected to remain subdued.

But EU continues to import from Canada adding to the domestic new crop which looks better than feared and after a rainy period in Eastern Europe, harvests have resumed in the last two weeks. Although harvest forecasts in Ukraine remain lower than last year's, yields are improving, and an increase in EU imports of Ukrainian rapeseed has been observed. There is still debate on how big the 2025 crop will be in EU and globally but for the moment there is no fear of shortages.

But above all, trade tensions between Canada and China are now expected to increase the flow of Canadian rapeseed to EU. China drove down Canadian prices, and consequently EU rapeseed prices, by announcing a new 75.8% tax on Canadian rapeseed, in addition to the 100% tax on rapeseed oil and meal, which has already caused an unusual import of Canadian meal into EU. It has even been reported that Canada is offering meal at a 30% discount to other Asian countries after China’s countermeasure to Canadian tariffs on electric vehicles (called anti-dumping measures on Canadian rapeseed).

China is likely to buy (after having kept out Australian seed for years for political reasons) Australian seed again which usually came to EU; so, this could be just a simple change of trade flows although all Canadian seed is from GMO which is not the case for Australian seed. Meaning oil from Canadian seed cannot be used for food. It will be interesting to see how all this develops in the coming months.

Sunflower seed oil

Nearby sunflower markets remained strong due to tight seed availability and sustained demand although there’s been little commercial activity in a seller’s market. Dry and hot weather has had a negative impact on the new crop development, and the global harvest is now estimated at only 59Mmt this season (still much better than the 55Mmt of last season)., compared to previous expectations of about 60.5Mmt. This may be exaggerated cautiousness but it is wise not to gamble on weather; and the weather seemingly is to remain hot and dry. Some rains over Russia and Ukraine in July and early august over Ukraine, delaying harvesting of winter crops, should have been beneficial for the sunflower crops. But there was no or little market activity with sellers pulling back as weather conditions continue to dominate.

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