For the Quarter Ending September 2023


North America:

In the third quarter of 2023, North American Soybean Oil prices reflected trends similar to those observed in Europe. Despite being slightly lower than the peaks seen in late July, soybean oil prices remained elevated throughout August 2023. This increase was primarily driven by concerns about crop safety amid exceptionally dry weather conditions in specific exporting regions. Weather conditions in South America, particularly in August, slowed import momentum, contributing to the upward price trend. Additionally, the United States saw positive growth in the Manufacturing Purchasing Managers' Index (PMI), rising from 46.3 in June to 49 in July, indicating expansion in the manufacturing sector for the second consecutive month. The Consumer Price Index (CPI) for July 2023 in the United States was 305.69. Towards the end of 2023, there was a surge in oil and gas demand, leading to increased demand for guar gum. In India, the world's largest guar gum producer, speculators raised bets due to a strong trend in the spot market. Scarce supplies from growing regions drove up guar seed prices. However, the Indian government imposed export restrictions on guar gum in August 2023 to curb rising domestic prices. Nevertheless, as September arrived, Soybean Oil prices in North America, particularly in the United States, witnessed a sharp decline influenced by weaker international quotations at U.S. ports and the abundant domestic supply of edible oils, specifically derived from Soybean Oil.

Asia Pacific:

In the Asia Pacific (APAC) region, soybean prices followed an upward trajectory at the beginning of Q3 and remained elevated until August, only to experience a significant drop in September 2023. This shift was primarily due to disrupted weather patterns in exporting countries, leading to fewer soybean imports and a subsequent supply shortage. Additionally, a surge in Chinese demand for soybeans resulted in a recovery of freight rates, alleviating margin pressures from weak downstream demand for imported beans from China. The official Purchasing Managers' Index (PMI) for July, according to data from the National Bureau of Statistics, registered 49.3, indicating a slowdown in manufacturing sector activity. In August, industries operated at a reduced pace, maintaining high supply rates while inventory levels declined, causing concern among market participants. Domestic merchants focused on replenishing their inventories in anticipation of rising demand, leading to a shift in the Consumer Price Index (CPI) from -0.3% in July to positive territory in August. Despite a brief uptick in the official NBS Manufacturing PMI for China from 49.3 in July to 49.7 in August 2023, surpassing market expectations, Soybean Oil prices took a downward turn as September approached. This decline was attributed to weakened demand from the biodiesel and animal feed industries, influenced by buyers' cautious approach amid escalating macroeconomic uncertainties. Additionally, uncertainty regarding the impact of the Double Festival, a major shopping holiday in China, further contributed to the downward trend in Soybean Oil prices during the month.

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Europe:

Throughout the third quarter of 2023, the Soybean oil market in Europe experienced turbulent market sentiments. In July, soybean oil prices surged due to persistent concerns about the region's soybean production prospects. Although inventories remained sufficient to meet domestic needs, they showed a steady increase compared to the previous month. Additionally, the FAO price index, tracking commonly traded food commodities, averaged 123.9 points in the most recent data, up from a revised 122.4 points in June. Despite a nearly 12% decrease from the previous year, it was still 22% lower than the record high set in March 2022 during Russia's invasion of Ukraine. In mid-Q3, the Eurozone Manufacturing PMI was 43.5, indicating a sharp decline in the manufacturing sector. New orders and export business dropped at record rates, contributing to the sector's deterioration. In the soybean market, both domestically and overseas, activity increased, with national reserve soybean auctions performing well. Additionally, a sharp increase in Ukraine's oil transit fees raised fuel costs, causing a 0.5% rise in inflation and slowing down the decline in the highest national price growth rate in the European Union. This, coupled with higher transportation expenses, pushed up soybean oil prices for the month. However, moving forward in September, international food raw material prices remained relatively stable, with declines in certain vegetable oils, including soybean oil, dairy products, and meat, offset by notable increases in sugar and corn prices. Adequate inventories among market participants supported the overall demand within the region, bolstering the September market outlook for soybean oil across Europe. With this, the price for Soybean Oil in Ukraine was assembled at USD 882/MT.

South America:

In Argentina, Soybean Oil prices surged until the middle of the third quarter in 2023 but plummeted as Q3 ended in September. This volatility was primarily driven by robust demand from importing nations such as China, Germany, Egypt, and Pakistan, coupled with a supply shortage due to weather disruptions caused by prolonged dry conditions in Argentina. These unfavorable weather patterns significantly reduced the crop yield in Argentina, a major exporter of soybean oil. Additionally, Argentine exports of grains and derivatives yielded revenue of US$1.925 billion in July 2023, marking a 21.8% increase from the previous month but a 39.2% decrease compared to July 2022. However, the economic landscape in Argentina was marred by challenges. August witnessed a staggering inflation rate of 12.4%, the highest monthly change in over three decades, aggravating the nation's existing economic instability. Argentina was already grappling with annual inflation rates nearing 115%, causing severe financial strain for its citizens and pushing many into poverty. Moreover, the Consumer Price Index (CPI) in Argentina rose from 1818.08 points in July to 2044.28 points in August 2023, influenced by higher manufacturing input costs resulting from escalating energy and raw material prices. At the same time, a significant decline in soybean oil prices in September can be attributed to various factors. Historically, September experiences reduced demand for soybean oil as food manufacturers prepare for the upcoming winter holiday season, coinciding with the completion of the soybean harvest. Additionally, an expected increase in the production of other vegetable oils, including sunflower oil, in 2023 added pressure on soybean oil prices. The rise in export competition due to this increased production further impacted soybean oil prices. To provide context, Soybean Oil prices in June concluded at USD 938/ MT FOB Buenos Aires.