Higher energy prices and the prospect of increased demand for the biofuels sector have put a bullish tone into oilseeds markets in recent weeks as geopolitics once again overshadow supply factors.
The International Grains Council (IGC) said in its Grain Market Report, published on May 21, that “average international soybean export prices were around 3% higher over the month tied to gains across all key origins.”
“Trading in Chicago futures was characterized by volatile activity, with direction often shaped by external influences,” the IGC said. “Moreover, against the backdrop of a further solid uplift in energy values and associated strength in vegetable oils, soybean spot futures advanced by a net 3% month on month.”
The price increase occurred “despite generally bearish supply and demand fundamentals, notably heavy South American availabilities and sluggish international demand for US supplies,” the IGC said. “With Gulf basis levels near-unchanged compared to late April, export quotations increased by 3%, to $479 fob.”
In South America, where the progressing harvest in Brazil partly weighed on new crop values, fob prices (Paraganua) were modestly firmer, at $448, as premiums eased, the IGC said.
“As a consequence, this further improved the competitive position of the country’s exporters versus their US counterparts,” the IGC said.
The IGC said ICE canola futures advanced by a net 4% month on month in sometimes volatile activity, largely linked to movements in external markets. It added that “slow planting progress and crop weather concerns in Canada also boosted sentiment as spot values touched around a 32-month peak in mid-May.”
The Council said this was “before a subsequent softening of crude oil prices pared overall gains.”
The Economic Research Service (ERS) of the US Department of Agriculture said in its Oil Crops Outlook: May 2026, that global oilseeds production for marketing year 2026-27 was forecast to increase by 19.6 million tonnes, to 718.1 million tonnes, “on higher soybean, sunflowerseed, rapeseed, peanut, and copra production, while palm kernel and cottonseed production is projected to decline marginally.”
“Higher soybean production, which is expected to reach a record high of 441.5 million tonnes, accounts for most of the gain,” the ERS said. “Global sunflowerseed and rapeseed production are projected to recover by 7 million tonnes and 1.4 million tonnes, on higher area and trend yield, assuming normal weather during the growing season.”
The projected increase in global sunflowerseed and rapeseed acreage for 2026-27 reflects better returns for oil crops compared to wheat and feed grains, the ERS said.
“The oil crops returns are supported by strong demand for vegetable oils, especially from the biofuels sector,” the ERS said.
The United Nations’ Food and Agriculture Organization (FAO) said in its Food Price Index, published on May 8, that the Vegetable Oil Price Index rose by 5.9% in April compared to the previous month, “reaching its highest level since July 2022.”
“The continued increase was driven by higher prices of palm, soy, sunflower and rapeseed oils,” the FAO said. “International palm oil prices rose for the fifth consecutive month in April, largely underpinned by prospective higher demand from the biofuel sector, supported by policy incentives in several producing countries and higher crude oil prices.”
The FAO continued, “Additional upward pressure stemmed from concerns over lower production in Southeast Asia in the coming months. Global quotations for soy and rapeseed oils increased, reflecting, respectively, firm demand for biofuel production in the United States and the European Union.
“Sunflower oil prices were supported by persistent supply tightness in the Black Sea region, whereas quotations in Argentina softened somewhat, as seasonally rising crushing activity boosted exportable supplies.”