U.S. soybean oil exports hit 15-year high as palm oil prices shift vegetable oil trade

NAPERVILLE, Illinois, March 6 (Reuters) - Despite being the world’s second-largest producer of soybean oil after China, the United States virtually stopped exporting the vegetable oil nearly three years ago amid sky-high prices.

However, the picture is completely different in 2025, which began with near-record U.S. soybean oil shipments. This reflects a reduction in prices as well as soybean oil’s competitive advantage over rival vegetable oils, keeping U.S. exporters in the game.

Census Bureau data released Thursday revealed U.S. soybean oil exports, opens a new tab , in January reached 212,714 metric tons, the highest volume for any month since January 2010 and the fourth-highest volume on record for any month.

By comparison, U.S. soybean oil exports in the 2022-23 marketing year ending Sept. 30, 2023, totaled just 171,417 tonnes, an all-time low.

Export demand for U.S. soybean oil has become scarce after global prices hit all-time highs in early 2022. This was partly driven by aggressive U.S. renewable fuel targets that, if implemented, would dramatically increase domestic use of bean oil.

But those plans didn’t exactly come to fruition. U.S. soybean oil export sales rose again in 2024 as prices fell to multiyear lows, particularly late in the year when soybean oil secured a rare discount to palm oil.

Palm oil is the most abundant vegetable oil, although production problems and biofuel policies have constrained global supplies. Palm oil futures briefly fell below soybean oil futures earlier this year, but bean oil is cheaper again, supporting its global demand.

India, the world's largest importer of edible oil, accounted for 20% of U.S. soybean oil exports in the first four months of 2024-25. South Korea, Colombia and Mexico combined for another 41% of the shipments.

Mexico is often a top destination for U.S. soybean oil, which could pose risks to exporters if full trade tariffs are reimposed in April.

Canada is a moderate importer of U.S. soybean oil, but most of its canola oil exports are destined for the U.S. Without a trade resolution between Ottawa and Washington, less Canadian canola oil crossing the U.S. border could increase domestic demand for U.S. soybean oil, leaving less room for exports.

STRONG SALES

As of Feb. 27, U.S. soybean oil export sales for 2024-25 totaled 764,000 tonnes, a 12-year high for that date. The U.S. Department of Agriculture estimates full-year exports at 726,000 tonnes.

Demand remains high as at least 40,000 tonnes of U.S. soybean oil sales were booked this week between two separate flash sales, which could put pressure on the USDA to raise its forecast next week.

Total soybean oil export sales to date represent an unusual 105% from USDA’s perspective. The most complete coverage to date in recent years has been between 85% and 89% in 2020 and 2022. Final exports in both years were significantly higher than USDA had projected in each February.

While not matching January’s feat, U.S. soybean oil exporters likely moved above-average volumes in February. As of last week, about 69% of all 2024-25 U.S. soybean oil supplies had been shipped, a relatively normal share.

The most successful marketing year for U.S. soybean oil exporters in the past decade was 2019-20, with 1.29 million tonnes.

BIGGER PICTURE

The United States will likely be the third or fourth largest supplier of soybean oil in 2024-25, although shipments from the largest exporter, Argentina, are expected to be eight times larger than those from the United States.

Argentina is expected to continue dominating the market, as record soybean processing volumes as well as export tax cuts are largely responsible for strong shipments.

On the demand side, India may need to increase purchases of vegetable oil in the coming months as below-average imports have depleted its stocks.

Leaving aside the USDA’s possible underestimation of U.S. soybean oil exports in 2024-25, the agency last week provisionally estimated that U.S. exports in 2025-26 would increase by about 5% year-on-year, along with a 2% increase in production.

Of course, a sudden and unexpected change in US biofuels policy could throw all these numbers out the window.

But barring that scenario, the United States could be on track to beat export estimates and remain a major source of soybean oil, especially without a drop in palm oil prices.

(Karen Braun is a Reuters market analyst. The views expressed above are hers.)

By Karen Braun; Editing by Christopher Cushing