Soybean oil prices in Chicago fell 7% in a week due to uncertainty over US biodiesel policy

During the year, soybean oil quotes on the Chicago SWOT increased by 30%, while palm and sunflower oil quotes increased by only 10-15%, amid restrictions on the use of imported vegetable and waste oils for biodiesel production in the US, as well as the White House's intentions to increase biodiesel production in the US. However, the uncertainty of these plans led to sharp speculative jumps in soybean oil prices during the season.

December soybean oil futures on SWOT rose by 6.4% from August 1 to 20, but by August 26 fell by 5.3% to $1,491/t (-2.7% per month, +30% per year).

The decline was accelerated by the Environmental Protection Agency's (EPA) announcement to extend (for an unknown period of 30 or 90 days) beyond September 1 the deadline for refineries to demonstrate compliance with their 2025 Renewable Fuel Standard commitments.

By the end of August, the EPA plans to make a decision on applications for exemptions for small refineries, which could provide 1.2-1.8 billion RINs to meet the requirements and increase the availability of biofuel credits.

Such news led to a sharp drop in the value of RIN codes, in particular credits for biofuels produced from biomass, which fell to their lowest level since April at $1.92 on August 24. This could reduce demand for biofuels, which is currently the main driver of soybean oil quotes in Chicago.

At the same time, on the physical market in South America, according to Platts, Argentine soybean oil for shipment in October is offered at $1,191/t FOB Up River, and Brazilian soybean oil is offered at $1,196/t FOB Paranagua.

Currently, the market remains under the influence of various factors affecting prices - uncertainty with biofuel demand is putting pressure on prices, but high oil prices are supporting quotes.