Soybean Oil Prices Drop by 6% Due to News on Tax Incentives for Biofuels in the US
Prices for soybean oil on the Chicago exchange experienced a significant drop, decreasing by 6% in one day to reach $1088/ton. The main factor was the emergence of information that the United States administration does not support initiatives to expand tax incentives for biofuel producers.
This is reported by AgroReview
Shift in Sentiment in the US Biofuel Market
Over the past two months, the market has seen active growth – prices for soybean oil increased by 25%. This was driven by rumors of a possible bill that would increase biofuel blending mandates in the US to 5.5 billion gallons by 2031, compared to the current 3.35 billion gallons.
However, it has become known that the Trump administration does not support the development of “green energy.” Additionally, according to lawmakers, a target for renewable diesel volumes for the next year is currently under consideration, which will be significantly lower than the 5.25 billion gallons proposed by the oil and biofuel alliance.
Global Factors Affecting the Vegetable Oils Market
After reaching an agreement between the US and China on tariff reductions at the beginning of the week, there was a sharp increase in soybean and soybean oil prices. However, even a 10% tariff does not allow American soybeans to compete with Brazilian ones, which again puts pressure on prices.
July soybean futures in Chicago fell by 2.5% to $386.2/ton, reflecting no change over the month and a decrease of 1.8% over two months. Additionally, negotiations between the US and Iran regarding the possible lifting of sanctions on Iran have led to a decrease in global oil prices. This limits the profitability of biofuel production, which also negatively impacts soybean oil prices.
The decline in soybean oil prices occurs simultaneously with a decrease in palm oil prices, driven by a seasonal increase in production. This, in turn, pulls down sunflower oil prices.
“Therefore, confirmation of the expansion of sunflower planting areas in the Black Sea countries in June could collapse prices for sunflower and new crop sunflower oil.”
At the same time, as of May 1, 2025, stocks of vegetable oils in ports and pipelines in India have fallen to their lowest level in the last five years — 1.35 million tons. This is associated with a 24.3% reduction in palm oil imports in April compared to March — to a four-year low of 321.5 thousand tons. Against this backdrop, palm oil prices in Malaysia have decreased to $900/ton.
It is expected that Indian importers will soon increase purchases of cheap palm oil, which will lead to a decrease in demand for more expensive Ukrainian sunflower oil, especially considering the increased supply from Argentina.