Since August, CME Group soybean oil futures have been locked in a 10¢-trading range. Near-record soybean production from the 2024 crop, coupled with the inauguration of US President Donald Trump and the transition away from green policies, has provided plenty of pressure for the oilseed byproduct. Yet, a barrage of bullish fundamentals has kept soybean oil futures bouncing higher each time they near a threshold of 40¢ a pound.
And recent data from the US Department of Agriculture (USDA) along with indications that long-awaited federal guidance for US biofuels producers may provide give the soybean oil market more upside than downside despite the tariff-induced bearish atmosphere engulfing much of the agricultural marketspace.
The major and most surprising driver sustaining the US soybean oil market has been export demand. Since the 2024-25 marketing year began on Oct. 1, US soybean oil exports through the week ended April 3 totaled 945,140 tonnes, about 976% higher than the 87,844 tonnes in the same period a year earlier. During the first half of last year’s marketing year, the average weekly sales total was 2,200 tonnes and the primary importers were Colombia, Mexico and Canada.
But during the same period this year, average weekly sales were around 1,277% higher at 30,300 tonnes, with frequent purchases again from Colombia and Mexico but also from the Dominican Republic, Venezuela and Guatemala. Several Asian countries also made multiple purchases, especially India, which has become a top buyer of US soybean oil, purchasing about 128,800 tonnes so far this year. Even China, which typically imports soybeans rather than soy products, earlier bought 13,000 tonnes.
The robust demand for US soybean oil was shocking to the market. Even the USDA did not appear to expect it. In its first projections of the marketing year, the USDA in its Oct. 11 World Agricultural Supply and Demand Estimates (WASDE) report pegged 2024-25 exports at 600 million pounds, which seemed reasonable given the 650 million pounds estimated in 2023-24 and the 378 million pounds in 2022-23. But by the end of November, US exports had surpassed the USDA’s initial forecast, and the Department raised its export outlook to 1.1 billion pounds in the December WASDE. Since then, the USDA has adjusted the forecast three more times to keep up with the accelerated export pace.
In its April 10 WASDE, the USDA forecast 2024-25 soybean oil exports at 2.3 billion pounds (1.04 billion kg), up 283% from its original forecast of 600 million pounds, up 272% from 2023-24 and up 508% from 2022-23. But with at least 2.1 billion pounds of US soybean oil already committed to exports, and with 23 weeks left in the marketing year, the Department likely will need to raise its export forecast in future reports.
The impetus fueling this year’s surge in soybean oil exports is price. During the first half of 2023-24, cash soybean oil prices in Decatur, Illinois, US, averaged about 52.5¢ a pound, according to Sosland Publishing Co. data. But cash soybean oil prices during the same period this year have averaged about 17% less at 43.5¢ a pound. Also keeping US exports competitive on the global market is the tumbling US dollar, which has dropped 9% from its January peak and remains under pressure from the global trade war.
At the same time, prices for palm oil, the world’s most consumed vegetable oil, jumped to a two-year high on expectations that adverse weather might impact crop output in major production regions. In December, palm oil prices were at a $160-per-tonne premium to soybean oil, which typically holds a $75 to $100 discount during that time of year, and the imbalance certainly helped steer export business to the United States.
In its March Oilseeds World Markets and Trade report, the USDA said the price of US soybean oil by early March had transitioned from the most expensive edible oil on the global export market to the least expensive in one year.
Also, several countries adopted policies that either strengthened their domestic demand for vegetable oils or limited their ability to export it, both of which proved advantageous for US exports.
For instance, Indonesia, the world’s leading supplier of palm oil, announced in December that it was raising the country’s export levy on its crude oil supplies to 10%, up from 7.5%. And both Indonesia and Brazil said they were expanding their biodiesel programs, creating higher demand for biofuel feedstocks, which reduces their export capacity.
Recently, the US soybean oil prices have been deriving strength from its domestic biofuel market. Earlier this year, President Trump directed “big oil” and biofuel producers to form a coalition to discuss mutually acceptable biofuel policies. In early April, the coalition proposed that the Environmental Protection Agency (EPA) set federal mandates for biomass diesel blending volumes at 5.25 billion gallons (19.87 billion liters) for 2026, about 57% higher than the current requirement of 3.35 billion gallons.
The EPA has not said if it will accept the recommendation, but analysts have wondered if the EPA’s embrace of these recommendations might catapult the soybean oil market back to the bullish heyday of 2022, when prices ranged consistently between 70¢ and 90¢ a pound.
A recent report by Czarnkow said true bull markets emerge when there is a perception of demand significantly exceeding supply, and this becomes evident when inventories start to sharply contract while usage accelerates. In the April WASDE, the USDA reduced 2025 US soybean oil carryover by 80 million pounds, to 1.45 billion pounds, its lowest in more than 10 years, but also reduced the 2024-25 soybean oil allocation for biofuel use by 200 million pounds.
If the EPA accepts the proposed recommendations for biofuel blending volumes and if global demand for vegetable oil remains robust, then the recent bullish gains in the US soybean oil market may finally sustain upward momentum.