For the Quarter Ending June 2023

North America

Soybean Oil prices in North America mirrored the market trends observed in Europe throughout Q2 2023. The prices of Soybean Oil continued their descent, persisting from the onset of Q1 2023 until June 2023. This enduring trend of weakened market sentiments for Soybean Oil was fueled by several factors. High inventories of soybean oil in the region, coupled with ample supply from European buyers, added downward pressure to the market. Additionally, Russia's disruption of the black sea grain trade exacerbated the situation, leading to reduced exports from Ukraine, a key producer. The decline in crude oil prices and notable reductions in Russian edible oil and grains offers contributed to this negative environment. This combination had far-reaching impacts on corn, soybean, and wheat prices. Rising interest rates and elevated energy costs further dampened import activities, as exporting countries experienced significant production reductions. Refinery inventory stability, or the lack thereof, also influenced North American soybean oil market sentiment, contributing to the ongoing downward trajectory of soybean prices in the region.

Asia Pacific

Across the APAC region, the pricing of Soybean Oil exhibited diverse trends between China and India, both importing countries. In April 2023, the prices of Soybean Oil remained stable in comparison to the previous month. Several traders attributed this stability to stricter customs inspections causing longer waiting times and resulting in disrupted demand. In China, concerns emerged about the lack of demand for domestic beans from the crushing industry, leading to increased domestic soybean stocks, particularly in the northeast region. Conversely, prices in India continued their decline until April, followed by a drop of over 10% in the middle of the second quarter. This decline was primarily driven by increased soybean production in exporting nations, which in turn elevated supply levels and pressured prices. By the end of June, Soybean Oil prices in the Chinese market experienced a slight improvement as demand from the downstream sector showed a marginal increase. With these dynamics at play, the prices of Soybean Oil in China reached USD 930/MT CFR Shanghai and INR 88000/MT Ex-Mumbai, following a consistent diminishing trend.

Soybean Oil Prices: https://www.chemanalyst.com/Pricing-data/soybean-oil-1318

Europe

The second quarter of 2023 witnessed a steady decline in Soybean Oil prices in Europe, culminating in a negative market sentiment. Ukraine, a significant exporter of vegetable oil, flooded the world market with a considerable quantity of vegetable oil at a reduced price. Despite the 60-day prolongation of the black sea grain initiative in May, the downward trajectory of soybean oil prices persisted. The European market faced an influx of short-term purchases ahead of the deal's renewal, leading to a loaded stock situation. As the latter half of Q2 came to a close, soybean oil prices continued their decline in June due to ample global exportable supplies. Germany also witnessed a reduction of over 2% in soybean oil prices. Additionally, the Food Price Index of the Food and Agriculture Organization of the United Nations (FAO) indicated a June inflation rate of 122.3%, down 1.4% from May and a significant 23.4% decrease from its peak in March 2022. As a result, Soybean Oil prices settled at $805 / MT Exw Kyiv in Ukraine and $1067 / MT CFR Hamburg in Germany.

South America

In the South American region, particularly in Argentina, Soybean Oil prices displayed an ascending trend. After a decline until May, prices slightly increased in June. A severe drought in April adversely impacted Argentina's soybean yields, reaching a record low according to the Argentine Grains Exchange (BAGE). The drought affected not only Argentina's corn, wheat, and soybean production but also its soybean meal and oil exports to Africa and Asia. This diminished domestic production created a supply shortage, affecting global food security. As the second quarter progressed, entities warned of reduced oilseeds supply due to the historic drought's impact on Argentina's harvest. The weakening foreign currency and the arrival of the harvesting season also influenced the overall market trend for various edible oils. June brought a moderate recovery in prices due to increased input costs like fertilizers and pesticides for harvesting. Higher inquiries from the United States, China, and other importing nations further bolstered Soybean Oil prices. By the end of June, Soybean Oil prices reached USD 973 / MT FOB Buenos Aires.



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