The global vegetable oil market is currently navigating through turbulent waters. After a strong rally in the first quarter of 2025, prices have reversed course sharply.
The catalyst? Surging inventories, a U-turn in U.S. biofuel policy, export competition from South America, and shifting buyer behavior across Asia and Europe.
The vegetable oil market is in a temporary but significant reset phase. The early-year optimism driven by U.S. biofuel policy has given way to bearish fundamentals, and market participants must now recalibrate. Yet, amidst the uncertainty lie opportunities especially for those who act strategically and stay ahead of regional shifts and seasonal cycles.
At GrainFuel Nexus®, we offer custom market intelligence, sourcing strategies, and policy insights for buyers, producers, and financial institutions navigating this complex global terrain.
Soybean Oil: From Market Leader to Burdened Anchor
Just two months ago, soybean oil was the star performer, with futures prices in Chicago rising 25% in just 10 weeks. Expectations were high that the U.S. would tighten its biofuel blending mandates, pushing demand for soy oil into overdrive. However , in a sharp policy shift, the Trump administration dialed back on these mandates, stunning the market.
Futures for July delivery on CBOT tumbled 5% in a single week to $1,099 Per M/T, then slid another 3% after trading closed, settling at $1,065 Per M/T . And that wasn’t all ....
According NOPA, April’s soybean crush volumes surged by 14% year-on-year, hitting a record 5.5 million M/T for the month. This surge pushed soybean oil inventories to a 10-month high of 950,000 M/T a massive overhang for a market already rattled by policy changes and falling energy prices.
The Global Ripple Effect
South America Steps In
As U.S. export competitiveness wanes, Brazil and Argentina are flooding the market with cheaper product from new harvests:
- Brazilian FOB soybean oil now at $1,053 Per M/T, gaining favor with cost-sensitive Asian buyers.
- Argentina is capitalizing on bumper soybean and sunflower crops, ramping up exports to markets like India that traditionally favored palm oil.
This South American surge is reshaping trade flows across the globe.
Europe’s Mixed Signals
In Europe, pricing is a tale of two markets:
- Soybean oil is trading at $,218 Per M/T FOB, supported slightly by elevated rapeseed oil prices $1,207 Per M/T FOB Netherlands).
- Sunflower oil, however, is feeling the pinch, with delivered prices in the EU falling to $1,120–1,150 Per M/T pressured by growing supplies from Ukraine and Russia.
Ukraine: Still a Pillar, Despite the War
Despite the ongoing war, Ukraine remains the world’s top sunflower oil exporter, and its role in the market cannot be overstated.
Production & Exports
- 2025/26 crop: Forecast at 14.4 million M/T, up 11% year-on-year a remarkable rebound.
- Exports through March 2025: Down 24% year-on-year, due to port bottlenecks and tighter government oversight.
Prices & Trade
- Export prices at Black Sea ports fell by $10 Per M/T this week, now sitting at $1,110–1,115 Per M/T FOB.
- In India, Ukrainian sunflower oil is offered at $1,200 Per M/T CIF Mumbai, while Russian offers are slightly lower at $1,120–1,125 Per M/T FOB.
- Turkey remains a key buyer, with prices at $1,190 Per M/T CIF Mersin.
Policy Intervention
In late 2024, Ukraine introduced minimum export pricing mechanisms to combat under-invoicing and stabilize revenue collection. While this added structure to the market, it’s also slowed some trade negotiations and shifted interest to alternative origins.
Palm Oil: Weighed Down by Weak Demand
Palm oil markets, especially in Malaysia, aren’t faring any better.
- July futures on the Malaysian exchange fell 0.7% this week to 3,896 ringgit Per M/T (~$913 Per M/T).
- Exports (May 1–25) rose modestly by 1.6–5.3% over the previous month.
- However, production is growing even faster, pushing inventories higher.
India, which many hoped would step in to support prices, is still largely on the sidelines. Buyers there are waiting for larger volumes from Argentina’s soybean and sunflower oil crop, which are becoming increasingly attractive.
Inventory Glut: A Global Overview
The numbers are staggering:
- Global vegetable oil production (2025/26) is projected to hit a record 234.5 million M/T up 6.7 million M/T year-on-year.
- This growth spans soy, sunflower, palm, and rapeseed oils.
- Crucially, no major climate disruptions are expected in the near term, which means supply-side risk remains low.
Market Outlook: What to Expect Going Forward
Short-Term (Q2–Q3 2025)
- Prices across the vegetable oil complex are likely to remain under pressure.
- Expect further downside unless:
- There’s a rebound in global crude oil prices.
- Biofuel mandates are restored or expanded.
- Major importing countries particularly India and China return with large-volume tenders.
Medium-Term (Late Q3–Q4 2025)
- Upside potential may return as:
- Global inventories get worked down.
- South American planting enters weather-sensitive phases.
- Seasonal demand increases, particularly for palm oil.
What Should Stakeholders Do ?
Buyers and Importers
- Lock in contracts now for Q3–Q4 needs while prices are low.
- Monitor supply chains closely freight availability and transit times remain volatile.
Producers and Exporters (especially Ukraine, Argentina, Brazil)
- Move inventories quickly before further declines.
- Watch for tender announcements from India, China, Turkey, and MENA buyers.
Policymakers
- Avoid overly rigid price controls that discourage competitive exports.
- In Ukraine, A smart synergy from traders /suppliers/ buyers for a solution on the logistical capacity and export infrastructure to maintain resilience.
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