In this report:
Introduction
Soybean Oil: A Global Economic Powerhouse
Soybean Oil Price History: A Rollercoaster Ride
What Drives Price Changes In Soybean Oil?
Is China a big producer of oilseeds?
How US-China Trade Tariffs may affect the global oilseed market
How does an El Niño Neutral (No El Niño or La Niña) affect global oilseed production?
WeatherWealth Trade Ideas: Why we maintain bearish new crop corn positions from $4.60 and KC wheat from $5.70. Special sugar video
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Introduction:
The price of soybean oil fluctuates due to weather conditions, crop yields, demand from the food and biofuel industries, and geopolitical events. Disruptions in these areas can create supply shortages, driving prices up.
Soybean oil plays a crucial role in our American economy. It’s not just in our kitchens for cooking and salad dressings, but also powers our vehicles as biodiesel and shows up in industrial lubricants and plastics.
The diverse uses of soybean oil keep demand strong, significantly affecting pricing. Other than old-crop corn prices, soybean oil has been the leader of the grain complex.
Prices broke to the upside last week, following my posting of this image in my updated newsletter last Thursday. Notice, on the bottom right, just how low soybean oil stocks are. This is nothing new, but China has a huge demand for soybean oil, even in the face of a Trade War.
The key, other than demand, the Trade War, and growing global demand for biofuels, is how weather will impact global soybean and oilseed production. I briefly touch on this in my report. While there are some potential bullish aspects to the soybean oil market, worries over a shifting US biodiesel policy and low crude oil prices, will create market volatility. Unless we see major global weather problems, most grain market will remain in a bear market into summer.
Anyway, my report below discusses soybean oil, what it is used for, and its importance in the world market. Weather can influence global soybean oil and palm oil production, but right now, until we get into the late spring and summer weather market season, it is demand (not weather) that is helping this market.
Other reports coming in the weeks ahead will center around corn belt weather and why coffee may go into a longer term bear market.
Soybean Oil: A Global Economic Powerhouse
Soybean oil significantly impacts the global economy, touching everything from our kitchens to energy production. As one of the most widely used vegetable oils due to its versatility and affordability, its price affects food manufacturers, energy producers, and chemical industries worldwide. Let me walk you through the key insights about this essential commodity. HOWEVER, I do not have any specific trading advice. You can make your own decisions.
What Makes Soybean Oil Special?
Extracted from one of the world’s most widely cultivated crops, soybean oil offers a mild flavor and high smoke point that makes it perfect for cooking, frying, and salad dressings. But its usefulness extends far beyond food – it’s crucial for biodiesel production as a renewable energy source and appears in numerous industrial products like soaps, cosmetics, lubricants, and paints.
(One can see the steady demand growth for biofuels)
Soybean Oil Price History: A Rollercoaster Ride
Soybean oil prices have fluctuated considerably over the past decade. From 906 USD per metric ton in 2014, prices dropped to a low of 756 USD in 2015 before gradually climbing. By 2022, prices peaked dramatically at 1,667 USD before settling above 1,100 USD in 2023. Projections suggest slight increases through 2024-2025, reaching around 1,150 USD.
Presently, the top chart looks potentially friendly this market, but geopolitical concerns and a big Brazilian crop are of concern.
What Drives Price Changes In Soybean Oil?
Supply-Side Factors
- Weather disruptions like droughts and floods significantly impact crop yields
- Global production levels and agricultural practices in major producing countries
- Export policies and trade restrictions from key producers
Demand-Side Factors
- Growing food industry demand is driven by population growth and urbanization
- Increasing consumption in developing economies, especially China and India
- Expanding biofuel industry as countries pursue renewable energy goals
Economic and Political Influences
- Trade policies, tariffs, and subsidies directly impact prices
- Currency exchange rates affect international demand
- Geopolitical instability in major producing regions creates market uncertainty
Soybean oil’s importance extends far beyond cooking – it’s a vital component of our global economy whose price fluctuations touch many aspects of our daily lives.
Is China a big producer of oilseeds?
China is only the sixth leading producer of oilseeds in the world. That means it relies greatly on imports.
Because of China’s very arable land, it relies on huge oilseed imports (soybeans, peanuts, sunflower, and cottonseed oils); some 23-27% of global demand.
How US-China Trade Tariffs may affect the global oilseed market
It is really tricky trying to guess how the Trade Tariff situation might impact the price of soybean oil and global oilseeds in general. However, concerns over positive Biofuel incentives could result in a bearish move in soybeans, especially if El Nino neutral brings improved global crops
One can see (table below) that back during the last Trade War with China in the summer of 2018-2019 and then COVID, it appears that China’s imports of global oilseeds temporarily dropped about 30-50% but then rebounded to more normal levels by 2020%.
The 125% US Tariffs against China will probably come way down. However, US exports of oilseeds to China will probably plummet. To meet its import demand, China could BID up the price of oilseeds, thus raising the cost for exporters such as Brazil and Argentina.
Other oilseed importers would shift their business to the U.S.
How does an El Nino Neutral (No El Niño or La Niña) affect global oilseed production?
An El Niño-neutral summer (ENSO-neutral phase) generally supports more stable global oilseed production due to reduced extreme weather disruptions.
Everyone is asking me if we will have a weather-related bull market in soybeans or oilseeds this summer. Stay tuned, I am still doing research.
However, usually (not always), the answer is NO for a major bull market in soybeans and from a weather perspective, oilseeds.
This is what happens during an El Niño-neutral northern hemispheric growing season:
Key Impacts on Major Oilseeds
Soybean Production
Neutral conditions usually avoid the yield suppression seen in La Niña (US/Argentina) and the mixed effects of El Niño (Asia/Europe).
Palm Oil
Major producers like Indonesia and Malaysia usually benefit from typical monsoon rainfall. They tend to avoid El Niño and reduce droughts. This should maintain Southeast Asia’s dominance in the palm oil chain.
Olive Oil
Neutral El Niño phases typically result in a recovery in production.
Sunflower & Rapeseeds
These crops face fewer regional stressors (e.g., heatwaves or excess rainfall), supporting steady yields in key regions like Europe and Canada
Bottom line:
Hence, it is unknown presently how much the current Trade War will greatly impact the oilseed market.
It’s not easy to stay abreast of all trade policies, weather patterns, and global biofuel demand, particularly since I am watching so many other markets, the technical aspect of commodity prices, and weather patterns in about six different countries all the time.
Trying to predict what prices will do months from now is not easy considering I have been concentrating on wheat in recent weeks and December corn on ideal US planting weather.However, unless I see spring or summer weather problems for global corn, soybean and wheat crops most grains will remain in bear markets
WeatherWealth Trade Ideas:
Top Trade Ideas:
No change.
Short July KC wheat with nice profits (keep) or out-of-the-money CBOT wheat call options from a week ago. My early forecast was that the drought would break for Plains wheat (a lot more rain coming) and improved Russia and Australian weather.
Short December corn from two weeks ago on great US planting weather and an overbought market (keep).
Natural Gas: Massive sell-off and my price objective met. Unsure about the market at these price levels
Even at these prices, the fact of Trade Tariffs with China suggests they will not import US LNG, and given warm spring weather, the market could even go lower. My forecast two months ago for a warm, European, and US spring has created a massive spiral down in prices. I have no new advice. We need to see some big Texas or southern US heat, or suggestions that late May or June will see strong demand to foster a new bull market, or at least end the bleeding.
I already caught the huge price drop six weeks ago (30%+) and will wait to give new advice before or during the summer.
Wheat: My warning and advice weeks ago not to get caught up in a bull market in wheat as global weather would eventually improve during this critical crop development time
Traders may be short July KC wheat on my advice from April 21st at $5.75 and are ahead nicely. To lock in profits of more than $1,400-$1,800 a contract, sell the July CBOT $5.20 put option against it. Risk a stop (if you did sell KC wheat) to $5.65 to lock in small profits.
One may also be short 2, July CBOT $6.00 wheat calls from 15¢ and area ahead about 8¢ x 2 contracts ($800)–super conservative, unfortunately.
If you did not sell wheat on my advice, the drought would ease in the Plains before anyone, and improving weather for Russia, do nothing then.
I sent this out (charts below) a week ago before the 25-40¢ collapse in wheat prices.
Maps and chart above from April 20th
Corn: Entering the Midwest weather market season with bearish planting weather suggested by me, two to three weeks ago
Traders may be short December corn from two weeks ago on my ideas of ideal early-season planting weather in the U.S. and a big net long position. No change, keep. This trade is now ahead about 10¢ ($500/contract).
Soybeans: Weaker dollar and stronger demand may help this market rally later, especially soybean oil
No advice until we get into the late spring and summer weather markets, though soybean oil could be supported on breaks.
Coffee: My Weather Spider was slightly bullish the last two to three weeks is more neutral and eventually more bearish.
Thanks to a few of you who emailed me last week, when I “casually mentioned” I was a more bullish Spider in the short term, you bought this market. I did not specifically recommend a buy, but those of you who read between the lines when the Spider was a bit more bullish, great. Otherwise, given these higher prices, demand may be hurt and seasonally more bearish factors. The Spider score is more neutral to even slightly bearish at these price levels.
The only “specific” trade I had in the last 2 months was selling the December 2025 coffee call option for about 18-20¢. This means that if there is no winter freeze in Brazil and the 2026 crop gets off to a better start later this year, you might be able to make up to $7,000/contact longer-term.
Notice, the changes from my recently cautiously bullish coffee spider the last two to three weeks. Most notably, seasonal factors have become a bit more bearish (-3), as well as the pattern recognition more neutral (0) as the market may be over-bought.
Longer term, the global crop score for the 2026 crop will likely be more bearish. However, for months, the 2025 global crop score has been extremely bullish (+4).
Sugar: Market will begin to watch weather for Brazil, Thailand and India, deeper in May and June.
My next full report will be a video this coming Sunday night or early Monday about the climatic factors that will influence global sugar weather, and potentially prices between May-October. I have no advice for now, but likely leaning bearish longer-term.
Please see this video about sugar
Cocoa: Strong grind data, a weaker US dollar and weak mid-crop help this market rally the last few weeks.
A poor mid-crop hitting the market, combined with stronger demand from a weaker dollar has once again helped this market soar again.
My last trade was long the May contract about a month ago with a quick 2-4 day potentially profitable trade. However, due to Trade Tariffs and outside factors, I have had no new advice recently.
In a couple of weeks, I will have a video about the climatic factors that will affect global cocoa weather and prices deeper into the northern hemispheric spring-autumn. I believe that cocoa prices will go higher and am slightly bullish due to the weather dollar and a poor West African mod-crop.My bias is to cautiously buy breaks into the month of May
