US soybean oil quotes continue to rise despite falling oil prices

Plans to increase U.S. biodiesel production by 60% by 2026 and limit the use of imported oil for biofuel production continue to push up soybean oil prices in Chicago, with even a drop in oil prices not stopping them from reaching new record highs.

 

The United States and Iran have reached an agreement to extend a ceasefire for sixty days and begin talks on Iran's nuclear program, but President Trump must approve the terms of the deal. The memorandum of understanding states that shipping through the Strait of Hormuz will be "unrestricted" and Iran commits to removing all mines from the strait within 30 days.

 

On news of progress in negotiations between the US and Iran, July Brent crude futures fell 9.2% to $93.9/barrel in the week (-17.2% in the month), but are still 49% above the level of early 2026. Analysts expect that if negotiations continue and tanker traffic through the Strait of Hormuz, which has intensified in recent days, resumes, oil prices will stabilize at $85-90/barrel.

 

Despite the decline in oil prices, July soybean oil futures on the Chicago SWOT increased by 3.9% to $1,692/t during the week (+3.5% per month, +54% since the beginning of 2026) due to increased demand from the biofuel industry.

 

Amid rising Chicago soybean oil prices, soybean oil prices in Brazil and Argentina have risen by $100/tonne in the month, but ample supply and limited global demand are holding back further growth. Soybean oil from Brazil and Argentina is currently being offered at $1,240-1,300/t FOB for June delivery, so the discount to Chicago prices has already reached $400-450/tonne again.

 

Even with such a large discount, importing soybean oil from South America to the US for biofuel production still remains unprofitable.

 

Recall that from 2025, the US has imposed restrictions on the use of imported oils for biofuel production, providing only 50% of subsidies for biofuels from imported oils, so the loss of 50% of the value of RIN credits makes the processing of imported oils at American plants unprofitable.

 

Soybean oil quotes were also supported by the EIA weekly report, according to which US crude oil inventories decreased by 3.33 million barrels (with expectations of a decrease of 3.0 million barrels), gasoline inventories by 2.57 million barrels (with expectations of a decrease of 2.29 million barrels), and distillate inventories by 2.1 million barrels to a 23-year low (with expectations of a decrease of 1.4 million barrels).

 

Falling oil prices will lead to lower fuel prices in the US, which in turn will reduce demand for biofuels, so soybean oil quotes will also begin to fall.