US soyabean and soyabean oil prices fall on lower demand from China

US soyabean oil prices on the Chicago Mercantile Exchange (CME) fell by 4% month-on-month (m-o-m) to USD 1,695/MT on 25th May. This represents a decline of 11% from the record high of USD 1,909/MT reached on the 28th of April, following the announcement of Indonesia’s palm oil export ban. Similarly, US soyabean prices on the Chicago Board of Trade (CBOT) declined by 3% m-o-m to USD 595/MT on 25th May. The decline in price for both soyabean and soyabean oil is attributable to reduced demand for soyabean and soyabean oil in China (the top edible oil consumer) amid prolonged COVID-19 lockdowns in several of its major cities.

According to the United States Department of Agriculture (USDA), global soyabean production for the upcoming 2022/23 marketing year (MY) (October-September) is expected to reach record levels, up 13% year-on-year (y-o-y) at 394.7 million tonnes. The increase in output is on the back of expectations of higher yields in South America (Brazil and Argentina) due to favourable weather and increased plantings. This follows lower than expected crop in the 2021/22 MY due to adverse weather conditions. Meanwhile, global soyabean oil output is projected to rise by 4% y-o-y to 61 million tonnes for the 2022/23 MY. US soyabean and soyabean oil prices have soared in the 2021/22 MY on higher export demand to offset losses from South America and a general price rally in the wider vegetable oil complex. Accordingly, the projected increase in output for the 2022/23 MY is likely to put some downward pressure on US soyabean and soyabean oil prices in the short term.