Canada Markets

Projections for significant growth in renewable diesel production and demand remain intact for North America, driving the overall need for expansion in oilseed production. At the same time, the USDA's Agricultural Outlook Forum's preliminary forecasts for the 2024-25 shows neutral data in terms of the forecast for production and consumption, while ending stocks of soybean oil are forecast to grow to the largest seen in three years and the average price for soybean oil is forecast to fall.

As seen on the attached chart, USDA data shows soybean oil production falling short of domestic consumption in 2022-23 by 175,000 metric tons (mt) and by a lesser 80,000 mt in 2023-24. This situation follows decades of annual production exceeding consumption.

Preliminary data released for 2024-25 today shows a 4.4% year-over-year increase in forecast soybean oil production, the largest percentage increase in three years to a record large volume, while consumption is also forecast to grow larger, although by a slower 3.7%. The production less consumption calculation results in a positive 9,000 mt, with production outstripping consumption for the first time in three years but by a very modest amount. This is barely legible on the chart.

As a result, ending stocks are forecast to increase for the first time in four years, while to the highest level in three years. The average price for soybean oil was lowered by 12% from the current marketing year to 45 cents/lb USD, while down 38.4% from the 2021-22 average of 73 cents.

While a bearish forecast, the only guarantee in this forecast is change and this forecast is far from being chiseled into stone.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com.

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