Bi weekly dd March 9th 2026.
He did it again...
If there is one man who can surprise the world and generate chaos, it certainly is Mr. Trump!
There is now persisting tariff chaos since the Supreme Court of the US ruled that president Trump’s previously unilaterally imposed import tariffs were illegal… with all its repercussions. And geopolitical uncertainty has become the norm.
To begin the month, the US and Israel started a bombing campaign that sparked massive retaliation from the Islamic Republic of Iran, targeting infrastructure across the Middle East. In addition, Iran's allies, the Houthis, pledged to resume attacking commercial shipping in the Red Sea and Iran’s threats and attacks on shipping stopped all traffic through the crucial Strait of Hormuz waterway.
This situation erased the previous bearish supply and demand forecasts for petroleum and pushed petroleum prices over $90/barrel; it also drove gas and fertilizer prices higher while raising global fears for shortages. Biofuels (e.g. ethanol made from corn, biodiesel from edible oils & fats) benefitted from the turmoil as higher energy prices strengthened the economics for biofuels like renewable diesel and biodiesel competing with fossil-based fuels. Gasoil prices rose to their highest level since late 2022!
Increased tensions led to a broad commodities rally and triggered fund buying and markets to look for alternative shipping routes as the war raises shipping risks and as the financial cost of sailing into the conflict zone became prohibitive. Some news headlines said it is putting the global economy at risk and even alluded to the start of World War III. Others spoke of “weaponization of trade” and “risk driven paralysis”.
An energy shock could be demand destructive, boost inflation (to stagflation?) and squeeze consumer spending power (higher car fuel, heating, electricity bills). And manufacturing and transportation of course also face cost increases.
Technical buying gave support to prices as short positions were being liquidated. And once more, zero stocks and just in time deliveries may become just too late or nothing at all or at the least very expensive. Although expensive is better than not getting. And those who have not covered their pipeline with, fixed price contracts, for the running month +3 (as they always should, to stay out of market technicalities) found themselves in a sudden (price) squeeze.
The US hinted this intervention could last four to five weeks and markets are trying to assess the consequences of a prolonged conflict and ongoing supply disruptions. But D. Trump can still surprise everyone by halting the intervention next week.
Meanwhile global markets for oilseeds and edible oils and fats remain very sensitive to geopolitical developments. Continuing strength of energy markets should support the oil complex and so our markets are expected to remain firm and volatile; but also vulnerable to corrections should the situation suddenly reverse; most oil/oilseed stocks remain high and weather conditions are generally rather favorable.
Markets
The USD
The rise of the USD, seemingly still a safe haven currency in times of crisis, made American and dollar denominated commodities slightly more expensive. A strengthening dollar makes European exports more competitive but imports more expensive (about 3% since mid-Feb.).
The Vegetable Oil Price Index
In February the FAO Food Price Index rose for the first time in five months, on higher grain, meat and vegetable oil prices and despite drops in dairy and sugar. The Vegetable Oil Price Index rose 3.3% month-on-month, to its highest level since June 2022. Global palm oil prices rose for the third month in a row, supported by good global import demand and seasonally lower productions in Southeast Asia. Soy oil prices increased on expectations of a supportive biofuel policy in the US, and rapeseed oil prices rebounded on prospects for stronger import demand from China for Canadian supplies. Sunflower seed oil prices retreated a bit on weaker demand due to high prices and increasing export supplies from Argentina.
Palm oil
In February, production in Malaysia is thought to have fallen by 15% to 20% to its lowest level since January 2025, following floods in the main growing region where heavy rainfall and flooding ravaged plantations. However, we are in the seasonally lowest production month, with several public holidays. Export figures were generally somewhat disappointing, despite India increasing its February imports by 10% month-on-month to a six-month high of 844,000 mt, supported by lower palm oil prices relative to competing oils. Malaysia's palm oil stocks, still historically high, likely fell their lowest level in four months, as seasonal production declines outweighed lower exports. Official figures will be out on Tuesday.
Rising soybean oil prices have depressed global import demand and India, the world's largest importer of edible oils, has canceled (washed out) large quantities of its soybean oil purchases from Russia and South America as palm oil grew cheaper. The Russian shipments were due to arrive in India late March or early April, the South American deliveries were scheduled for April to July. This came on top of cancellations in January, with at least 35,000 mt canceled, and in December, when buyers canceled maybe 100,000 mt from Argentina.
Palm oil was the cheaper alternative, and the market hoped to see more purchases of palm oil by India. But recent price developments cast doubt as RBD palm olein from Malaysia is trading at the same price as crude soybean oil from Argentina. And gasoil is now more expensive than crude palm oil: $1158/mt compared to $1135 FOB Indonesia. But how long will that last?
For the first in two years, the POGO-spread (palm oil/gas oil) is negative, making biodiesel production viable without subsidies. Which raises the question of whether the Indonesian government will revive its plan to increase the biodiesel mandate from B40 to B50? which of course would send palm oil prices higher…. There are no more certainties.
Respond to change and keep shifting gear quickly or become obsolete!
Soybean oil
The bulls seem in full control of the soybean complex. Soaring energy prices pushed soy oil to new records which in turn pulled up beans to their highest level since May 2024. The Iran situation also fueled some buying interest as in times of war, food security becomes a priority.
The bullish sentiment was further driven by high crush margins in the US, which are encouraging processors to keep going as long as possible. Hopes for further Chinese purchases, some weather issues in the US and South America, as well as disruptions in fertilizer supplies, and last but not least the ongoing story since more than a year now about finalizing a favorable biofuel policy, were also supporting factors.
After the US Supreme Court ruled on the import tariffs imposed by D. Trump, which were largely declared illegal, the market remained highly uncertain and hesitant. Although the president has already imposed a new global import tariff of 10%, many questions remain about the future of earlier concluded trade agreements. The ruling could have consequences for soybean sales, which are at the center of the trade negotiations between China and the US. D. Trump had said earlier that China had committed to increase its purchase of US soybeans to 20Mmt this season. But without the pressure of higher import tariffs, China is unlikely to make further purchases and could turn to Brazilian soybeans, which are much cheaper.
A record harvest in South America kept weighing on the market, and attention is focused on whether China will make “goodwill purchases” in the run-up to the planned summit between Presidents Trump and Xi Jinping. Negotiators from the US and China will meet mid-March to try finalizing deals before Trump's expected visit to Beijing begin April. And then there is the war in Iran which cut off China from a petroleum supplier after Venezuela’s cheap supply was cut off. This could be a double-edged sword pushing China to smoothen relations with the US.
Rapeseed oil
Rapeseed oil prices remain volatile due to tensions around petroleum prices. Prices had been fluctuating for some time without clear direction, as the entire oilseed complex reacted cautiously after the Supreme Court ruling that invalidated the import tariffs imposed by the Trump administration almost a year ago. The ruling could have a significant impact on the trade agreements the US had previously concluded with China, the EU, Mexico, and Canada.
The major rise in energy prices boosted the oilseed complex, including biofuels and the raw materials needed to produce them, and particularly soybean oil in Chicago, which was already trending up on announcements of favorable biofuel policy changes in the US.
European rapeseed is benefiting from improving trade relations between Canada and China, which is expected to quickly take a significant share of Canadian exports as earlier this month, Chinese authorities confirmed a drastic reduction in import duties on Canadian rapeseed and rapeseed meal.
Sunflower seed oil
Sun oil prices did not react in panic to the intensification of geopolitical unrest although some extra war risk premium for the Black Sea region and the Middle East hovers over the market. Especially in an already restrained supply environment. But buyers stayed reluctant and the little business was mostly hand to mouth business.The ongoing harvest in Argentina should be about 45% done by now and expectations remain for a record crop of over 6Mmt. Some Argentine sunflower seed has already been shipped to Bulgaria which started to pressure local seed prices and more seed is expected to come to EU.
If warfare in the Black Sea and Middle East eases there would be some downside price potential especially as next season’s production is expected to grow tremendously.
Energy
Shutting down the Strait of Hormuz resulted in unexpected complications for global trade. For example, soybean meal cannot be shipped to Persian Gulf countries which could lead to a problem of soybean meal disposal and weigh on crush margins or potentially stop some crushing activity if the situation persists for too long.
About 20 to 30% (depending on what is counted) of global petroleum trade goes via the Strait. Most of that would go to Asia. But also 20% of global liquified natural gas (LNG) production passes there and Qatar Energy, which accounts for about 15% of LNG supplies, said it was halting production. As inventories run up productions stop; if not already damaged.
The Strait of Hormuz is also important for fertilizer: the Gulf region represents 30% of global urea exports and accounts for more than 40% of sulfate exports, which are used in certain types of fertilizers. Fertilizer prices are already at historic highs worldwide and a shipping stop/blockade is very worrying.
Natural gas accounts for 80% of the production costs of nitrogen fertilizers, and the war led to the closure of fertilizer plants in the region, limiting supply to major importers worldwide, just as the spring sowing season in the northern hemisphere is about to begin!
Farmers are facing higher prices and uncertainty about the supply of essential inputs, as the price of diesel per hectare rises, as do transport costs, eventual drying costs, storage costs, etc. These costs will be passed on throughout the supply chain, from field to plate. All this is also creating more uncertainty about sowing plans and yield potentials…
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