Lang
At present, high domestic soybean oil stocks coexist with weak demand. Forward sales by crushers for the coming months are progressing slowly, and trader activity remains subdued. Given the volatile situation in the Middle East, edible oil prices are likely to be prone to gains but hard to push sharply lower in the short term.
Over the medium term, attention should focus on US weather conditions, the recovery in domestic demand, the sustainability of exports and other fundamental variables, pending signs of a shift in supply and demand.
While China's edible oil market is currently drawing support from continuing conflict in the Middle East and firm international crude oil prices, soybean oil prices are expected to come under pressure once that support fades.
In detail, soybean oil futures and spot prices in China are gradually trending higher, while the basis remains firm for nearby contracts but weak for deferred ones. As of 23 April, China's soybean oil basis against the Y2609 contract remained weak, with the Panjin basis at 180 yuan per tonne, Tianjin at 150 yuan, Rizhao at 150 yuan, Zhangjiagang at 280 yuan and Dongguan at 320 yuan per tonne.
Earlier, expectations surrounding Indonesia's B50 biodiesel policy and the prospect of a super-strong El Niño event pushed soybean oil, palm oil and rapeseed oil futures higher for three consecutive sessions. As long as the Middle East situation remains unresolved, prices are likely to stay volatile, with the basis firm against nearby contracts and weak against deferred ones.
Prices will nonetheless return to fundamentals once the support from crude oil strength fades.
On the supply side, the core logic behind ample global soybean oil supply is the substantial abundance of soybeans as a raw material, with the main producing countries reinforcing that surplus further.
In South America, the world's principal soybean producing region, the US Department of Agriculture has raised its forecast for Brazil's 2025/26 soybean output to a record 180 million tonnes. The harvest is almost complete and April exports are strong, with an estimated 15.78 million tonnes to be shipped globally, providing solid raw material support for soybean crushing. This is expected to lift Brazil's soybean oil output by 700,000 tonnes year on year to 12.54 million tonnes as capacity continues to come on stream.
For US soybeans, planted area for 2026/27 is expected to rise to 84.7 million acres, up 4.3% year on year but below market expectations of 85.55 million acres. Assuming normal weather later in the season, production is estimated at 4.45 billion bushels, a substantial year-on-year increase. Old crop soybean exports and crush have remained stable, with ample stocks.
Soybean and soybean oil prices on the Chicago Board of Trade have continued to trend lower, adding to cost-side pressure on domestic soybean oil prices. US soybean oil output is expected to rise by 510,000 tonnes year on year to 13.76 million tonnes, while stocks edge up to 840,000 tonnes, modestly increasing supply pressure. At the same time, exports are likely to fall sharply by 590,000 tonnes year on year, reflecting weak external demand that reinforces the picture of abundant supply.
On the demand side, global soybean oil consumption has biodiesel policy as its key variable, with export demand easing slightly.
The continued implementation of the Renewable Volume Obligation (RVO) policy in the United States and Indonesia's B15 blending mandate have driven significant growth in domestic soybean oil consumption in both countries. US domestic soybean oil consumption is expected to grow by 1.11 million tonnes year on year to 13.31 million tonnes, while Brazil's consumption rises by 640,000 tonnes to 11.05 million tonnes.
Biodiesel has therefore become a decisive demand driver. However, the recent retreat in international crude oil prices has weakened soybean oil's energy attribute, making the support from biodiesel uneven and difficult to sustain.
In addition, palm oil's cost competitiveness is diverting demand away from soybean oil.
Malaysian palm oil has entered its seasonal production upswing. Between 1 and 15 April, output per hectare rose 26.16% month on month and total production jumped 27.42%. Exports nonetheless remained weak, with shipments from 1 to 10 April down close to 40% month on month, pushing edible oil prices lower.
Indonesian palm oil supply is also recovering gradually. Lower palm oil prices are pushing some food service and food processing demand to switch from soybean oil to palm oil, capping incremental demand for soybean oil.
Overall, in the USDA's monthly report published in April, global soybean oil exports for 2025/26 were estimated at 13.90 million tonnes, down 1.31 million tonnes year on year, pointing to significant weakness in export demand.
In China, the main support for domestic soybean oil supply comes from soybean imports and crusher operations. Although some crushers are currently idle because of a soybean shortage, the expected increase in soybean arrivals over the next three months will lift crusher operating rates, boosting soybean oil output and significantly strengthening domestic supply capacity.
As of 17 April 2026, China's commercial soybean oil stocks stood at 1.01 million tonnes, up 13,600 tonnes, or 1.37%, on the previous week and 263,200 tonnes, or 35.35%, year on year. Current stock levels are far above where they stood a year ago, creating sustained downward pressure on prices.
Notably, soybean oil exports for 2025/26 are expected to reach 500,000 tonnes, a sharp 56% year-on-year increase, indicating that domestic soybean oil prices are internationally competitive and that the export window remains open.
Source: Mysteel