Lang
Soybean oil prices fell 6% in a single day amid rumours that US authorities oppose expanding tax exemptions for biofuel producers.
A speculative 25% rally in soybean oil prices over two months had prompted representatives of the oil and biofuel industries to draft legislation raising US biofuel blending mandates to 5.5 billion gallons by 2031, up from the current level of 3.35 billion gallons.
However, the Trump administration is known not to support "green energy", and information emerged from lawmakers on Thursday indicating that next year's renewable diesel volume target — currently under discussion — would be far lower than the 5.25 billion gallon level proposed by the coalition of oil and biofuel producers.
July soybean oil futures on the Chicago Board of Trade fell 6% on Thursday to $1,088 a tonne, though they remain 2.9% higher than a month ago and 17.6% higher than two months ago, suggesting there may be further room for decline.
An agreement between the United States and China to cut tariffs earlier this week had driven a sharp rally in soybean and soybean oil prices, but recognition that a 10% tariff still leaves US soybeans uncompetitive against Brazilian supplies renewed downward pressure on prices.
July soybean futures on the Chicago Board of Trade fell 2.5% on Thursday to $386.2 a tonne (unchanged over the month, down 1.8% over two months).
Talks between the United States and Iran, which could lead to the lifting of US sanctions on Iran, are also weighing on oil prices, narrowing biofuel production margins and pressuring soybean oil prices.
The decline in soybean oil prices, combined with falling palm oil prices amid rising seasonal output, is putting pressure on sunflower oil prices. As a result, confirmation of an expansion in sunflower planting across Black Sea countries in June could trigger a slump in prices for the new sunflower crop and oil.
Vegetable oil stocks at Indian ports and in pipelines fell to a five-year low of 1.35 million tonnes as of 1 May 2025, after palm oil imports in April dropped 24.3% from March to a four-year low of 321,500 tonnes. Against this backdrop, palm oil prices in Malaysia fell to $900 a tonne, and Indian importers are expected to increase purchases of cheap palm oil in the coming months, which would curb demand for higher-priced Ukrainian sunflower oil, especially amid rising supply from Argentina.