China’s Decision on American Soybeans Affects Prices and Demand for Palm Oil
China has decided to stop purchasing American soybeans for the current marketing season, which could lead to a decrease in soybean oil prices on the global market. This, in turn, weakens the competitiveness of crude palm oil (CPO) compared to other vegetable oils.
This is reported by AgroReview
Global Balances and Price Competition
According to Oil World, the global soybean stocks-to-use ratio is expected to rise to 12% by the end of August 2026, marking a record high in recent years. Estimates suggest that the global figure will reach 29.5%, signaling an oversupply in the market. This will exert significant pressure on vegetable oil markets and lead to a decrease in their value.
Analysts note that over the past three weeks, the price difference between palm oil and soybean oil has narrowed by 55%: from $263 per ton in June 2025 to $42 per ton today. Further declines in soybean oil prices may further limit demand for palm oil. For instance, India reduced its palm oil purchases by 18% from January to August 2025 compared to the same period last year, favoring imports of soybean oil instead. If the price difference remains minimal, palm oil import volumes may stay low.
Geopolitical Factors and Future Projections
“U.S. President Donald Trump announced a potential halt to trade in used cooking oil with China in response to Beijing’s refusal to buy American soybeans, calling it an ‘economically hostile act.’ According to him, the U.S. can meet its domestic demand for cooking oil independently, adding uncertainty to the global vegetable oil market.”
The market situation is complicated by tensions in trade relations between the U.S. and China. Additional uncertainty is introduced by Indonesia’s intention to implement a B50 biodiesel standard in 2026. This move is expected to reduce palm oil exports by 5.3 million tons. Despite experts’ doubts about the country’s technical readiness, the Indonesian government confirms its determination to implement the program. The introduction of the standard in mid-2026 could potentially increase domestic demand for palm oil by 2.65 million tons and reduce global supplies of edible oils, which are already under pressure due to soybean oversupply and geopolitical risks.