Scenarios for vegetable oils markets in 2025/26

In the case of soybean oil, the 2025/26 season should bring an environment of greater supply on the global market, due to higher expected production in major producing and exporting countries such as Argentina, Brazil and the United States. On the demand side, there is a trend towards greater consumption in China and India, as well as an increase in domestic use in the large producers mentioned above. In the case of China, there is also an increase in supply due to a probable increase in soybean crushing, which will require greater imports of soybeans (112 M tons).

Even with the increase in supply, the trend is for world ending stocks to be only slightly higher regarding the 2024/25 season, given that world consumption tends to continue to grow significantly, mainly due to the greater use of soybean oil for biodiesel production in some countries. Therefore, if the crops of the major producing countries suffer losses, it is possible that we will see negative adjustments in supply, which could even lead to smaller ending stocks.

Along these lines, it's important to point out that the current figures are derived from projections of "full" yields in the main soybean producing countries, and that these yields have yet to be confirmed. For now, we only have a glimpse of what the new North American crop, which is in the final stages of planting, will look like. Even so, everything will depend on the weather in the coming months to define the new crop, and it is possible that we will see important adjustments to the projection if the weather is not favorable.

Finally, on the demand side, we would highlight the trend towards lower consumption and consequently less appetite for imports on the part of India, which should once again prioritize the use of palm oil with a possible increase in production from "its neighbors" Indonesia and Malaysia.

Regarding palm oil, the trend is also for an increase in supply in the 2025/26 season, supported by the likely increase in production in the two main producing and exporting countries, Indonesia and Malaysia. In this sense, if the higher productions are confirmed, we should see a further increase in palm oil exports from these countries.

Production in Indonesia, the largest producer and exporter of palm oil, is expected to rise from 46 M tons in 2024/25 to 47.5 M tons in the 2025/26 season. This growth should allow for an increase in exports, from 22.6 M tons (2024/25) to 24 M tons (2025/26).

Regarding Malaysia, the second largest producer and exporter, the trend is for production to rise from 18.7 M tons to 19.2 M tons, which should allow exports to rise from 15.4 M tons to 15.8 M tons in the new season.

On the demand side, we would highlight the strong growth trend in imports from India, which are expected to rise from 7.7 M tons to 8.7 M tons by 2025/26. This trend contrasts and is linked to possible lower imports of soybean oil, as mentioned above.

As with soybean, the current figures are based on full production and could still change significantly. Therefore, if palm production in Indonesia and Malaysia is lower than currently estimated, we could see significant changes in export and import figures, as well as ending stocks.

Regarding the price relationship between soybean oil and palm oil, the momentum points to a more favorable scenario for increased consumption of palm oil in the coming months, which after several months is registering prices at lower levels than the soybean-derived pair.

In the scenario for canola oil, initial projections for the 2025/26 season point to a very similar picture to that seen in the 2024/25 season, with few changes in the main figures.

On the supply side, there is a trend towards equal or slightly higher crops in the main producing countries: China, Canada and Russia, as well as the European Union.

Regarding exports, the highlight is the trend towards a small drop in sales to Canada, the world's largest canola oil exporting country.

World ending stocks are expected to be slightly lower than those recorded in the 2024/25 season, with no major changes.

The world scenario for sunflower oil differs somewhat from other vegetable oils in that it is more influenced by the conflict between Russia and Ukraine, a fact that deserves special mention. This is because these two countries are the world's main producers of this oil, as well as naturally being the biggest exporters. Thus, the conflict affects not only production, but mainly exports from these countries, since the main route for exports is the Black Sea (a region considered key in the conflict).

In view of this, the current projections for the 2025/26 season may change even more in the coming months, depending on the course of the war, as well as the climate issue.

Current projections point to growth in Russian and Ukrainian production and a consequent increase in exports. The highlight is Ukrainian production, which is expected to increase from 5.3 M tons in the 2024/25 season to 6.0 M tons in the 2025/26 season. It's important to note that part of this growth should be due to an increase in the area sown to sunflower and part to an expected recovery from the losses recorded in 2024/25 due to the dry and hot weather that hit important producing regions in the country. With this production, Ukrainian exports should reach 5.6 M tons in 2025/26, compared to 4.9 M tons in 2024/25.

On the demand side, the trend towards greater imports by large importers/consumers such as India and China stands out.