Soybean oil prices fall amid uncertainty over US biofuel market and falling oil prices, but India's tariff cuts will boost demand

July soybean oil quotes in Chicago fell another 3.2% to $1,035/t on Friday (-5.2% in three sessions, -5.3% in the month) amid reduced export demand for expensive American oil, the possible elimination of tariffs on Canadian rapeseed oil used for biofuel production in the US, and information that the White House seeks not to reduce the volume of biofuel production mandates for small refineries. Prices are also pressured by a sharp drop in oil prices.

July Brent crude futures fell by 2.4% to $62.8/barrel in two sessions (+3% month-on-month) amid escalating trade tensions between the US and China and OPEC+'s decision to increase crude oil production in July by over 411,000 barrels/day.

However, on Monday, oil prices rebounded from this decline and rose on expectations of a Russian strike on Ukraine in response to a furious attack by Ukrainian UAVs on Russian strategic aircraft and amid threats by the US Senate to impose a 500% tariff on countries that buy Russian oil.

The vegetable oil market is still under pressure from falling soybean oil prices, but the significant reduction in crude oil duty by the Indian government will support demand.

The Indian government on May 30 reduced the basic import duty on crude palm, soybean and sunflower oil from the current 27.5% to 16.5%, taking into account the tax on the country's agricultural structure and development, as well as social security allowance. At the same time, the import duty on refined palm, soybean and sunflower oil remained at 35.75%.

In addition, the Indian government has extended duty-free import of yellow peas from May 31, 2025 to March 31, 2026.