July 15, 2025 – Week 29 Market Update

Global vegetable oil markets rallied this week following a bullish USDA report that incorporated new biofuel regulations into US soybean oil supply and demand estimates, triggering significant revisions to consumption forecasts and export projections.

USDA projects record soybean oil biofuel consumption

The US Department of Agriculture dramatically increased soybean oil consumption forecasts for biofuels, projecting record consumption of 15.5 billion pounds in 2025-26 – representing a 23% increase above the three-year average and 12% above the June estimate.

This surge in domestic demand has prompted the USDA to slash soybean oil export forecasts from 1.7 billion bushels to just 700 million bushels – a massive 59% reduction that fundamentally alters global trade flow expectations.

US soybean crush volume is expected to reach a new record of 2.54 billion bushels to meet the unprecedented biofuel demand, while soybean exports are projected to decline 4% to 1.745 billion bushels from the previously forecast 1.815 billion bushels.

Market reaction across oil sectors

CBOT soybean oil prices increased to $1,200/mt from $1,192/mt despite weaker Brent crude oil, with the USDA revisions providing strong fundamental support. The bullish soybean oil sentiment rippled across other vegetable oil sectors.

Palm oil prices climbed to $965/mt from $947/mt, driven by both the stronger soybean oil complex and robust Indian import demand ahead of festive season preparations. Indian vegetable oil imports surged to 1.549 million metric tons in June from 1.187 million mt in May, with palm oil imports jumping to 956,000 mt.

Indonesian supply estimates show tighter balance

Indonesian palm oil production is estimated at 4.482 million metric tons in June versus 4.670 mmt in May, while ending stocks declined to 2.251 million metric tons from 3.038 mmt in May. Early July shipment data shows Indonesian exports at 521,617 mt for July 1-10 – 90% above the same period in June.

Rapeseed complex supported by Ukrainian supply concerns

MATIF rapeseed prices gained EUR 2/mt to EUR 466/mt while September crude rapeseed oil jumped EUR 14/mt to EUR 1,025/mt, supported by stronger soybean oil prices and Ukrainian supply uncertainties.

Ukrainian rapeseed harvest progress remains extremely slow with only 290,000 tons collected compared to 1.1 million tons by this time last year. Ukrainian production is estimated at 3.160 million metric tons versus 3.700 mmt last year, with exports projected at 2.683 mmt.

The market faces additional uncertainty regarding a potential 10% export duty on Ukrainian rapeseed, which could further reduce export availability.

Sunflower oil gains on weather concerns

Crude sunflower oil prices increased to $1,240/mt from $1,228/mt, supported by stronger soybean oil fundamentals and emerging weather concerns in key growing regions.

Soil moisture conditions have deteriorated in EU countries and the Black Sea region, with forecasts indicating above-normal temperatures and continued rainfall deficits during the crop’s critical development stage. Ukrainian sunflower seed production forecasts were reduced to 14.524 million metric tons from 14.674 mmt previously.

Coconut oil supply outlook improves despite price gains

Coconut oil prices increased to $2,676/mt from $2,624/mt despite improved supply projections. The International Coconut Community updated global production forecasts to 3.564 million metric tons in 2025 from 3.499 mmt in 2024, citing recovery in Philippines and Indonesia copra production.

However, Philippine coconut oil exports have declined in recent months due to high prices, while the Philippine government proposed suspending the biodiesel mandate increase planned for autumn, potentially increasing export availability.

Tariff tensions add uncertainty

Trump’s threat of 30% tariffs on Europe continues to create market uncertainty, particularly affecting the olive oil sector where the US is the largest importer of EU olive oil. The EU has indicated potential retaliation while seeking to negotiate favorable terms.

Market outlook and procurement implications

The USDA’s dramatic revision of US soybean oil fundamentals represents a structural shift in global vegetable oil markets. The 59% reduction in US soybean oil export forecasts will likely tighten global supply availability and support international vegetable oil prices.

Procurement strategies must adapt to this new reality where US biofuel regulations have fundamentally altered traditional trade flows. The ripple effects across palm oil, sunflower oil, and rapeseed markets suggest diversified sourcing approaches will become increasingly important.

Weather developments in key growing regions and the resolution of Ukrainian export policies will be critical factors influencing Q4 supply availability and pricing.

Access the full Oils and Fats Market Analysis for week 29 on the Vesper platform here: https://app.vespertool.com/market-analysis/2102