July 11

7/11 – After peaking at $.90/lb in April, soy-oil futures have declined to $.6407 (7/8) – roughly where they were a year ago. What’s changed? Because of biofuel policy, soy-oil prices are now correlated (over 80%) with crude oil. Crude peaked at $123.70 per barrel in March but has since dropped to $104.79. Also, Indonesia rescinded its palm oil export ban and is still struggling to unload excess supplies accumulated during the ban. Soy-oil looks to average in the upper $.60s in 2022, up from $.5815 in 2021 and well above a 6-year average (2015-2020) of just $.3117/lb. Renewable diesel initiatives are likely to keep veg-oil prices elevated. The USDA says 12B pounds of soy-oil will go into biofuel production in 2022-23, accounting for 45.4% of all soybean oil produced in the U.S. That’s up from 10.7B lbs (40.8%) in 2021-22, and 8.8B lbs (35.4%) in 2020-21.