Soybean Oil prices in North America followed similar market trends in Europe during Q2 2023 as the prices of soybean Oil continued to drop from the beginning of Q1 2023 until June 2023. This persistent weaker market sentiments for Soybean oil were supported by high soybean oil inventories in the region, ample supply from European buyers, Russia's interruption of the black sea grain trade, which continued to put pressure on the market as exports from Ukraine, one of the main producers, decreased. In addition, there was a hard down move in Crude Oil Prices and sharply lower Russian edible oil and grains offers. This combination was extremely negative for corn, soybean, and wheat prices. In addition, rising interest rates and higher energy prices had a negative impact on import activities as the production in exporting countries was reduced significantly. Furthermore, n significant changes in refinery inventories also impacted the North American soybean oil market sentiment, keeping the prices of soybean in the southward direction.
Across the APAC region, Soybean Oil prices showcased an ascending trajectory in China while continuing to drop continuously in India, both of which are importing countries. With the commencement of April 2023, the prices of Soybean oil dropped stably compared to the previous month, as several traders stated that owing to stricter customs inspections which led to longer-than-expected waiting times and demand disruption. Also, Chinese soybean farmers have been complaining about a lack of demand for domestic beans from the crushing industry, increasing domestic soybean stocks in China, especially in northeast China, said another trader. However, in the case of India also, the prices continued to drop in until April. While in the middle of the second quarter, the prices went down by more than 10 percent. One of the primary factors that supported this decline in the prices includes higher soybean production in the exporting nations, which has contributed to the increase in supply with higher stockpiles, putting further downward pressure on its prices. At the end of June, the prices for Soybean oil improved in the Chinese market as the demand from the downstream sector improved slightly. With this, the prices of Soybean oil in China were assembled at USD 930/MT CFR Shanghai and INR 88000/MT Ex-Mumbai with a consistent diminishing trend.
The second quarter (2023) of the Soybean oil market ended on a negative note, with a steady decrease in prices. Ukraine, which is one of the largest exporters of vegetable oil, is exporting a large quantity of vegetable oil to the world market at a much lower price than normal. The first half of the summer (May to August) was marked by a sharp decrease in the price of soybean oil for delivery to FOB black sea Ukraine, as the 60-day prolongation of the black sea grain initiative confirmed on 18 May did not bring any relief in the downward prices of soybean oil. The European market remained heavily loaded with stocks purchased in the short term ahead of the renewal of the deal. As the second half of Q2 draws to a close, a few market analysts say that soybean oil prices continued to decline in June amid high global exportable supplies. Similarly, soybean oil prices in Germany also decreased by over 2 percent. Apart from that, according to the Food Price Index of the Food and Agriculture Organization of the United Nations (FAO), which tracks monthly changes in global prices of widely traded food commodities. The FAO's Food Price Index showed that inflation was 122.3% in June, down 1.4% from May and down 23.4% from its peak in March 2022. As a result, soybean Oil prices in Ukraine closed at $805 / MT Exw Kyiv in Ukraine while the price in Germany was $ 1067 / MT CFR Hamburg.
Soyabean Oil prices in the South American region, especially in Argentina, show an increasing trend as prices declined until May and slightly increased in June. Argentina's soybean yields fell to a record low in April, according to a report from the Argentine Grains Exchange (BAGE). One of the world's leading agricultural suppliers, Argentina, was hit by a severe drought in the month of April, affecting the country's corn, wheat, and soybean production, as well as its soybean meal and oil exports to Africa and Asia. With a significant drop in Argentina's domestic production amid this historic drought, the country has cut off a critical supply for global food security. Following the mid-second quarter, the entities also warned about the reasons behind the decrease in oilseeds supply and the higher availability of oilseeds from the new harvest due to the arrival of the harvesting season. The weakening of foreign currency during this month also impacted the overall market trend of various edible oil both domestically and in the foreign market. As the month progressed into June, the prices recovered at a moderate level. One of the reasons behind this price increase is the increase in the price of inputs such as fertilizer and pesticides used for harvesting. Higher inquiries from the United States, China, and other importing nations also contributed to the price increase of soyabean oil, one of the main used vegetable oils. Soyabean Oil prices in June ended at USD 973 / MT FOB Buenos Aires.
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