Soybean oil rallies in CBOT as India agrees to cut duties on US supplies

Traders said prices might rise more if India scales back purchases from South America

Chicago soybean oil rose to its highest level in more than six months, driven by hopes that India will buy more after proposing to open parts of its agriculture market to cheaper US imports, the Bloomberg news agency reported today.

 

India agreed to cut or eliminate import duties on a slew of US agricultural products, including soybean oil, according to a joint statement on the framework for an interim trade deal released late Friday in the US. That followed an announcement made last week by US President Donald Trump that India would buy over $500 billion of US products, including agriculture.

   

The most actively traded soybean oil contracts on the Chicago Board of Trade surged as much as 1.9 per cent to the highest since July during intraday trading, extending last week’s rally after Trump first announced the deal.

 

India is the world’s largest edible oil importer, buying around 16 million tonnes of seed oil annually, mainly palm, soy, and sunflower oil from producers in Southeast Asia and South America.

 

Soy oil imports from the US are relatively marginal, totalling some 200,000 tonnes in the January–November period last year. The trade deal with the US could allow American supplies to gain market share from other major exporters and curb demand for competing edible oils.

 

Soy oil prices in the US may rise further once details of the deal are finalised and the agreement could see India scaling back purchases from South America, Bloomberg quoted Sandeep Bajoria, chief executive officer of Sunvin Group.

 

The most traded palm oil futures on Bursa Malaysia Derivatives were steady at around 4,184 ringgit ($1,062) per tonne. The near-term outlook for palm oil remains positive as prices are still about $100 cheaper than soy oil, Bajoria said. Futures may trade between 4,050 ringgit and 4,450 ringgit through the end of March, he added.

 

Meanwhile, addressing a conference in Kuala Lumpur, Indian Vegetable Oil Producers' Association (IVPA) President Sudhakar Desai noted that “global edible oil markets have entered a phase of structural volatility, driven by trade realignments, biofuel mandates and supply rigidity”. In a statement on Monday, Desai, who is also the CEO of Emami Agrotech Ltd, said the geopolitical restructuring has altered global trade corridors.

 

On the recent string of FTAs signed by India, including the one with the US, Desai said recently concluded FTAs and bilateral arrangements with partners such as the US, EU, Australia, UAE and SAFTA members have become integral to market pricing and sourcing decisions. “These agreements now directly influence landed cost structures, arbitrage flows and refining economics,” he said.

 

The IVPA is a five-decade-old trade body representing India’s edible oil and oilseed value chain.

 

The interim framework agreement, released by India and the US over the weekend, showed that India has agreed to import soybean oil from the US. Traders had said if significant quantities of soybean oil are allowed from the US at zero duty, subject only to an additional 5 per cent agriculture cess, it would weigh on crude soybean oil prices from Argentina, the world’s largest producer, and could also affect imported palm oil prices.

 

In 2024–25, according to data, India imported a record 5.47 million tonnes (mt) of soybean oil, surpassing the previous high of 4.23 mt recorded in the 2015–16 edible oil year. In 2024–25, around 4.8 mt of soybean oil imports were in crude form, with the remainder imported as refined oil.

 

The bulk of crude soybean oil imports during the year came from Argentina, at 2.89 mt, followed by Brazil at 1.14 mt, and Russia. The US accounted for just about 0.18 mt, or roughly 4 per cent of total crude soybean oil imports in the 2024–25 season.

 

Desai, meanwhile, estimated that India’s edible oil production will be 9.6 million tonnes in the 2025–26 marketing year, and that it will have to import around 16.7 million tonnes of cooking oils to meet domestic demand. India imports soybean oil mainly from Argentina and Brazil, while the country imports palm oil from Malaysia and Indonesia. Of the total domestic demand, the country has to import about 60 per cent of the quantity.