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The Global Soybean Oil Market Continues to Grow Despite Languishing Demand for Biodiesel During the Pandemic

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The Global Soybean Oil Market Continues to Grow Despite Languishing Demand for Biodiesel During the Pandemic

IndexBox has just published a new report: ‘World – Soya-Bean Oil – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The soybean oil market indicates steady growth, despite the COVID-19 pandemic cut demand for biofuel. The competitive price of soybean oil, against the price for sunflower and palm oil, combined with the potential growth in demand for biofuels and increasingly robust environmental standards, signal tangible prospects for the further development of the soybean oil market

Key Trends and Insights

USDA estimates that global soybean oil production increased from 58M tonnes in 2019, to 61M tonnes in 2020. China and the USA constitute major producers of soybean oil, increasing output to 17.6M tonnes (+7.1% y-o-y) and 11.6M tonnes (+2.1% y-o-y), respectively.

Global soybean oil exports also remain robust, amounting to 12.6M tonnes in 2020, growing slightly against the previous year. Argentina, a key exporter of soybean oil, increased exports by 800K tonnes y-o-y in 2020, to 5.9M tonnes, despite the 600K tonnes slump in production against 2019. This increase in exports is largely a result of the decline in biodiesel production, necessitating the export of soybean oil that was originally designated for the production of biodiesel. A significant expansion of Argentia’s exports is not envisaged in 2021, due to the strong rate of the Argentine peso, high export duties, and the decline in demand for biodiesel and soybean meal, factors exacerbated by the pandemic.

In February 2021, average export prices (FOB, as monitored by International Grains Council) in the USA, Argentina, and Brazil increased against those in January 2021, reaching $1118/tonne (+$68/tonne), $1078/tonne (+$21/tonne), $1063/ton (+$10/tonne), respectively. From February 2020 to March 2021, soybean oil prices surged from 660-700 $US/tonne to 1000-1220 $US/tonne.

Soybean oil currently maintains a price advantage over its competitors. The average price (Decatur; Average Wholesale Tank Crude) for soybean oil in the USA, according to USDA estimates, stood at $748/ton in 2020-21, while the average price for sunflower oil reached $1,257/ton (Minneapolis FOB).

The global soybean oil market is forecast to develop in the medium term, following an increase in domestic demand in those countries where prices for competing for oil products, such as sunflower oil, remain higher. In the long-term, the potential market growth could be generated by the increased global use of sustainable soybean biodiesel, thereby echoing the Paris Agreement’s commitment to reduce greenhouse emissions.

China to Remain the Main Consumer while India to Lead in Import

The global soybean oil market expanded modestly to $51.2B in 2019, with an increase of 1.6% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price).

The countries with the highest volumes of soybean oil consumption in 2019 were China (18M tonnes), the U.S. (10M tonnes) and Brazil (8.7M tonnes), with a combined 63% share of global consumption. These countries were followed by India, Argentina, Bangladesh and Mexico, which together accounted for a further 15% (IndexBox estimates).

In value terms, China ($18.4B) led the market, alone. The second position in the ranking was occupied by the U.S. ($8.3B). It was followed by Brazil.

The countries with the highest levels of soybean oil per capita consumption in 2019 were Argentina (53 kg per person), Brazil (41 kg per person) and the U.S. (31 kg per person).

In 2019, global soybean oil imports stood at 12M tonnes, increasing at an average annual rate of +2.3% from 2012 to 2019. In value terms, soybean oil imports amounted to $8.9B (IndexBox estimates) in 2019.

India represented the key importing country with an import of around 3.1M tonnes, which resulted in 26% of total imports. Algeria (876K tonnes) ranks second in terms of total imports with a 7.3% share, followed by Bangladesh (6.3%), China (5%), Morocco (4.6%) and Peru (4.5%). The following importers – South Korea (347K tonnes), Colombia (336K tonnes), Venezuela (320K tonnes), Egypt (228K tonnes), Nepal (198K tonnes) and the UK (187K tonnes) – together made up 14% of total imports.

In value terms, India ($2.2B) constitutes the largest market for imported soya-bean oil worldwide, comprising 25% of global imports. The second position in the ranking was occupied by Algeria ($561M), with a 6.3% share of global imports. It was followed by Bangladesh, with a 5.5% share.

Source: IndexBox AI Platform