In the November WASDE report, minor changes were made to the 2022/23 marketing year (MY) soybean balance sheet, with marginal increases in the US crop slightly offset by higher m-o-m domestic consumption estimates. Rising demand for soybean oil by the US biodiesel sector, the recent jump in crude oil prices and optimism of easing inflation in the US have contributed to soybean oil maintaining its price ceiling in the vegetable oil complex. Consequently, the Mintec Benchmark Prices (MBP) for Soybean Oil FCA NL stood at EUR 1,640/MT on 16 November, up 1.9% on the month. However, further price gains were capped by concerns over rising COVID-19 cases in China. Despite Mintec sources reporting low soybean stock in China, the nation’s demand outlook remains a concern, due to uncertainties surrounding its zero-COVID policy.
While analysts had anticipated a reduction in the 2022/23 MY US soybean exports, this was left unchanged at 55.7 million tonnes in the WASDE report. Nonetheless, disruptions to bean exports, on the back of decade-low water levels in the Mississippi River, continue to support soybean oil prices. According to market participants, bean quality is being negatively impacted, due to insufficient storage, with farmers now transporting their crop via rail to the Gulf Coast, or shipping through West Coast ports to offload supply. Poor bean quality would result in more seed being needed to process soybean oil, consequently leading to higher prices.
In Argentina and Brazil, the former’s soybean crop was revised lower by 2.9% from the October report, to 49.5 million tonnes, on the back of a lower harvested area. While Brazil is still set to retain its record level crop for the 2022/23 MY, at 152 million tonnes (+19.7% y-o-y), the country’s biodiesel mandate is set to increase to 14% (B14) in January 2023, and to rise further to 15% (B15) from March 2023 onwards. This could see exportable volumes reduce, thus putting further upward pressure on soybean oil prices.
