Since April, China’s soybean oil market has witnessed notable price fluctuations, with the spot price of Grade 4 soybean oil in the Zhangjiagang region oscillating between ¥7,900 and ¥8,500 per ton. After the May Day holiday, prices stabilized around ¥8,200, with bullish and bearish forces locked in a fierce tug-of-war. The market remains at a crossroads as it contends with conflicting signals from global supply dynamics, trade tensions, and policy shifts.
South America Leads Global Soybean Output Growth
The increase in global oilseed production in 2024/2025 is primarily driven by higher soybean yields, particularly from South America. Total global oilseed output is projected to rise to 676.62 million tons, up 2.95% year-on-year. Of this, soybean production alone accounts for 420.84 million tons, a jump of 24.47 million tons.
Brazil, a key contributor, is experiencing record harvests, with nearly 170 million tons of soybeans already collected, exerting significant pressure on global supply. While Argentina’s harvest is slower, production is still expected to reach close to 50 million tons.
Currently, South America is in its peak export season, coinciding with the U.S. soybean planting period. Brazil has sold more than half of its soybeans, boosted by trade shifts driven by U.S. tariffs, which have pushed China and Europe toward Brazilian supply. However, with easing U.S.-China trade tensions—highlighted by a joint statement from Geneva talks on May 12—Brazil’s export premium could weaken slightly.
Despite this, Brazil’s soybean crushing margins are up roughly 75% year-on-year, suggesting limited downside for export premiums, currently at 138–180 cents/bushel for June through August. Any decline is likely to be capped within 20 cents.
U.S. Planting Advances, Biodiesel Demand Boosts Soybean Oil
In the United States, soybean planting is progressing faster than usual. As of May 11, 48% of soybean fields were planted, surpassing last year’s rate and the five-year average. The USDA has projected a high yield of 52.6 bushels per acre and expanded the harvest area to 82.7 million acres. While favorable weather supports planting, the anticipated “weather premium” has yet to materialize.
At the same time, a consensus between the U.S. government and major oil firms to increase biodiesel quotas is expected to lift soybean oil demand. The EPA is reportedly considering a sharp increase in biomass diesel blending requirements for 2025, from 3.35 billion gallons to as much as 5.75 billion gallons. This policy shift has already driven up U.S. soybean oil prices and could continue to offer price support.
China’s Imports Low, Stocks Rebuilding Post-Holiday
Domestically, China’s soybean imports fell significantly in Q1 2025. Customs data reveals arrivals of just 17.11 million tons, well below the typical 20 million tons for the same period in previous years. This lower supply drove soybean oil prices higher in early 2025.
In April, Brazilian soybeans began arriving in bulk, yet customs clearance delays and sluggish crushing kept oil mill operations subdued. However, post-May Day, inspection processes sped up, leading to a sharp rise in both soybean arrivals and operational rates at crushing facilities.
According to Mysteel’s survey, as of May 9, national port soybean inventories reached 6.234 million tons, up 702,000 tons weekly and 620,200 tons year-on-year. Soybean oil inventories in key areas climbed to 654,400 tons, up 4.4% from the prior week but still down 22.91% from a year ago.
Brazil to Remain Main Supplier as U.S. Imports Stay Unattractive
Despite mutual tariff reductions between China and the U.S., the impact on U.S. soybean imports remains largely symbolic. With Brazilian crushing profits hovering just below ¥100/ton from June to August and U.S. soybean imports incurring losses of around ¥400/ton, Chinese oil mills have little incentive to shift sourcing.
As such, Brazil is expected to remain China’s primary soybean supplier at least through September. The cost side will continue to support domestic prices, though May is likely to face pressure from increased supply. Spot prices—like those of Grade 4 soybean oil in Zhangjiagang—could soften to around ¥8,000/ton.
In Q2, China’s soybean arrivals are forecast to rebound to 28 million tons, though still trailing last year’s 29.9 million. This should limit further downside for soy and soybean oil prices. Import costs are unlikely to fall below ¥3,600/ton, and once prices stabilize in the ¥7,800–¥8,000/ton range, buyers may find it an opportune window to begin building positions.
