The Chicago Board of Trade (CBOT) soyabean oil futures price climbed by 13.1% month-on-month (m-o-m) and by 22% year-on-year (y-o-y), to USD 1,667/MT on 2nd November 2022. The m-o-m price rise was on the back of La Niña uncertainties, which could see global soyabean output for the 2022/23 marketing year (MY) fall from projected levels, following a reduction in US output estimates. Additionally, rising crude oil prices contributed to the upward price momentum. Similarly, the Mintec Benchmark Prices (MBP) for soyabean oil crude FCA Netherlands was up by 3.1% m-o-m on the same day. According to Mintec sources, many EU buyers have low coverage and thus scrambled to obtain supply, resulting in the price rise.
Various factors are watch points for global soyabean oil prices in the coming months. If La Niña weather patterns remain, the Brazilian soyabean crop could fall below the estimated record high for the 2022/23 marketing year (MY), projected at 152 million tonnes (+19.7% y-o-y) by the USDA. Recent uncertainties surrounding the grain corridor deal will also be a watch point. On 29th October, Russia withdrew from the grain corridor deal, only to rejoin on 2nd November, based on receiving guarantees from Kyiv. If the deal were to continue, as agreed by Russia, global sunflower oil supply will remain at good levels. However, if this were to change, demand for alternative oils, including soyabean oil, will rise, consequently leading to higher global prices.
For the longer term, protectionism policies by the newly elected Brazilian president could drive up global soyabean and soyabean oil prices, as Brazil is already looking to lift its biodiesel mandate from 10% (B10) to 15% (B15) by March 2023. If realised, this could drastically reduce the amount of exportable supply for the global market.