July 8, 2025 – Week 28 Market Update

Global vegetable oil markets experienced broad-based gains this week as US biodiesel regulations favoring domestic feedstocks and emerging tariff policies created new dynamics across international commodity flows.

Palm oil strengthens on multiple support factors

Crude palm oil (BMD) prices increased $8/mt to $947/mt as markets responded to stronger Brent crude oil and supportive stock projections. Brent crude climbed to $68.43/barrel from $65.86/barrel after Iran limited International Atomic Energy Agency access to nuclear sites, raising Middle East escalation concerns.

Malaysian palm oil stocks are expected to show only a 0.55% monthly increase to 2 million metric tons, while production could decline 1-2% due to holiday periods. Export growth of 3-4% is anticipated on strong Indian demand, with some surveying companies projecting gains of 4-5% in June.

Indonesian shipments could surge 22% in June to 2.2 million metric tons according to industry surveys, reflecting robust regional demand patterns.

Freight rates climb on geopolitical tensions

Vegetable oil freight rates increased significantly across key shipping routes, with Straits to Rotterdam rates jumping to $75/mt from $58/mt at the beginning of June. The Israel-Iran conflict prompted shipowners to switch from vegetable oils to clean petroleum products, creating capacity constraints.

“When the conflict kicked off, the uncertainty and sudden increase in insurance premiums caused a spike in rates for clean petroleum products. Owners switch from carrying veg oils to carrying CPP – what we call swing tonnage,” explained one freight analyst.

Soybean complex gains momentum on biodiesel policy

CBOT soybean oil rallied to $1,192/mt from $1,158/mt as Congress passed the “One Big Beautiful Bill,” extending the 45Z program for US biofuel producers while limiting tax credits to North American feedstocks (US, Canada, Mexico).

This regulatory change should incentivize producers to use soybean oil rather than imported used cooking oil from China or animal fat from Brazil, providing structural support for domestic oilseed demand.

Tariff uncertainty creates market volatility

US tariff announcements on select countries are creating new market dynamics, with Malaysia facing 25% tariffs and Indonesia 36%. Notably, Indonesia and Japan together purchased 3.6 million metric tons of US soybeans last year.

The EU faces potential 17% tariffs on agricultural products, with Trump threatening broader trade action. The EU has indicated it may retaliate against US soybeans, though current focus remains on securing favorable trade terms.

Rapeseed faces harvest pressure despite rival oil strength

MATIF rapeseed declined EUR 4/mt to EUR 464/mt and canola dropped CAD 14/mt to CAD 686/mt as harvest pressure and higher production forecasts weighed on prices. Strategie Grains increased EU rapeseed production estimates to 19.2 million metric tons from 18.6 mmt.

European rapeseed processing declined to 10.2 million tons in January-May, the lowest in three years, as high purchase prices and reduced biodiesel demand decreased processing profitability.

Sunflower oil supported by rival oil strength

Crude sunflower oil (6 ports) increased to EUR 1,052/mt from EUR 1,028/mt as rising soybean oil and palm oil prices provided support. However, EXW Ukraine sunflower prices declined $5/mt to $607/mt as processing plants undergo technical maintenance.

Russian sunflower production could reach 18-18.5 million metric tons versus 16.2 mmt last year, while Ukrainian production is projected to increase 1.5-2 million tons due to expanded planted area.

Specialty oils demonstrate resilience

Coconut oil prices strengthened with crude coconut oil (EXW Manila) rising to $2,608/mt from $2,573/mt, while palm kernel oil (CIF Rotterdam) jumped to $1,660/mt from $1,555/mt. The coconut oil premium over palm kernel oil expanded to around $1,000 across all positions.

Olive oil prices continued their upward trajectory with refined olive oil (EXW Spain) increasing to EUR 3,030/mt from EUR 2,900/mt as bottlers stock up for holidays and Prays damage threatens to reduce the upcoming harvest by 10%.

Market outlook and procurement strategy

The convergence of US biodiesel regulations, tariff policies, and geopolitical tensions is creating a complex trading environment with significant implications for global commodity flows. Tariff uncertainty could generate additional volatility as policies are finalized across multiple jurisdictions.

Procurement timing becomes crucial as regulatory changes favor certain origins while potentially disrupting established supply chains. The structural shift in US biofuel feedstock preferences, combined with freight rate volatility, suggests traditional sourcing strategies may require adjustment.

Access the full Week 28 Oils and Fats Market Analysis on the Vesper platform here: https://app.vespertool.com/market-analysis/2082