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Soybean oil from Argentina, the world's leading exporter, is currently trading at its lowest discount in at least a decade compared to rival supplies from the United States. This significant price differential is primarily influenced by two factors: the ongoing robust harvest on Argentina's Pampas crop belt reaching its peak, and recent actions by Washington to increase biofuel blending requirements.
According to data from Commodity3, the discount for Argentine soyoil dropped to approximately 24 cents per pound below global benchmark futures on the Chicago Board of Trade this week. This marks the lowest point recorded in a data series extending back to 2016. On Friday, the price gap narrowed slightly to 23.6 cents.
Argentine farmers are in the process of collecting an exceptionally large soybean crop, with forecasts from the Buenos Aires Grain Exchange estimating it at 48.6 million metric tons. A Thursday report from the exchange also indicated that yields in the country's prime growing regions are exceeding historical averages. Processors, who convert these soybeans into oil and feed meal for export, typically boost their purchases and production levels during this period.
The substantial discount also coincides with an ascent in prices for US soyoil. This climb follows the Trump administration's implementation in March of expanded biofuel blending requirements, which are expected to significantly increase demand for both soyoil and corn ethanol. Reflecting this heightened demand, soyoil futures have seen gains of more than 50 percent over the current year.
Source: Buenos Aires Times