SunSirs: Soybean Oil Faces Near-Term Downward Pressure

In overseas markets, abundant rainfall in Brazil's primary soybean-producing regions has further solidified expectations for a bumper new-crop harvest. Concurrently, significantly delayed U.S. soybean sales and a narrowing export window have driven sustained declines in CBOT soybean prices, thereby reducing soybean import costs.

Domestically, pressure from imported soybean supply has intensified. China's soybean imports exceeded 100 million tons from January to November 2025. Oil mills maintain high operating rates, keeping domestic soybean oil inventories persistently elevated. Overall, soybean oil prices are likely to remain under pressure in the near to medium term.

New Crop Brazilian Soybeans Projected for Bountiful Harvest

Planting for Brazil's new soybean season is nearing completion. According to the crop progress report from Brazil's National Supply Company (Conab), as of December 13, soybean planting progress reached 94.1%. While slightly below last year's 96.8% at the same time, it significantly outpaced the five-year average of 90.6%. Major producing states including Mato Grosso, Mato Grosso do Sul, and Paraná have completed all planting. Markets anticipate Brazil's soybean production for the 2025/2026 season will reach a record high of 177 million tons, representing a 3.3% year-on-year increase.

Notably, nearly all soybean-producing regions in Brazil have received effective rainfall over the past two weeks. Meteorological agencies forecast continued abundant precipitation and cool temperatures over the next fortnight, creating highly favorable conditions for soybean seedling growth. Given the current planting progress and weather outlook, the likelihood of Brazil's new soybean crop breaking production records has further increased.

In Argentina, soybean planting is accelerating. According to the BAGE Crop Planting Weekly Report, as of December 10, Argentina's soybean planting rate rose to 58.6%, up 13.9 percentage points from the previous week and exceeding the five-year average of 54.9% for this period. The USDA's December Supply and Demand Report maintained its forecast of a bumper Argentine soybean crop at 48.5 million tons.

Sales progress for the 2025/2026 U.S. soybean crop lags significantly behind the same period last year. According to the USDA report, cumulative sales for the year reached 20.72 million tons as of November 20, up from 18.40 million tons the previous week but still down 38.4% year-on-year. Sales progress stands at approximately 46.6%, significantly behind the 65.7% recorded during the same period last year.

Currently, FOB prices for Brazilian soybeans and U.S. Gulf soybeans are comparable. However, China's 13% import tariff on U.S. soybeans eliminates profit margins for commercial purchases of U.S. soybeans for crushing. Consequently, approximately 12 million metric tons of U.S. soybean purchases at this stage primarily originate from state reserves. U.S. Treasury Secretary Janet Yellen explicitly stated that the fulfillment period for this portion of purchases will be extended from “by the end of 2025” to “by the end of February 2026.” This adjustment confirms China's trend of gradually slowing the pace of new U.S. soybean purchases. Concurrently, the increasingly clear prospects for a bumper South American soybean harvest not only signal fiercer competition in the global soybean export market during the first quarter of next year but also directly weaken the current marginal demand outlook for U.S. soybeans, further pressuring U.S. soybean futures prices.

Domestic Soybean Oil Supply Remains Ample

Influenced by Sino-US trade factors, domestic oil mills have increased purchases of South American soybeans this year to mitigate potential supply risks. According to customs data, China imported 103.789 million tons of soybeans from January to November 2025, marking a 6.9% year-on-year increase.

Concurrently, China has initiated its committed purchase plan for 12 million tons of US soybeans, while the State Reserve Corporation (SRC) has launched auctions of imported soybeans to free up storage capacity. On December 11, 400,000 tons were sold out of the 510,000-ton imported soybean reserve release plan, indirectly boosting commercial soybean circulation in the market.

Notably, despite sustained high import volumes, recent tightening of customs quarantine policies has extended clearance cycles for imported soybeans. This adjustment has effectively alleviated temporary supply pressures for imported soybeans domestically.

Domestic oil mills maintain ample soybean supplies. According to monitoring data from China Grain and Oil Business Network, as of December 15, total domestic imported soybean inventories reached 8.055 million tons, up 251,000 tons from the previous week and significantly exceeding the 6.08 million tons recorded during the same period last year.

Soybean crushing volumes at oil mills remain at elevated levels. Data from the National Grain and Oil Information Center's oil mill crushing monitoring shows that in November, crushing volumes at major domestic oil mills reached 9.01 million tons, up 180,000 tons month-on-month and 830,000 tons year-on-year, exceeding the average for the same period over the past three years by 1.2 million tons. With December soybean imports maintaining high arrival volumes, domestic soybean crushing at major oil mills is projected to reach approximately 8.7 million tons this month. As of December 12, crushing volume at major oil mills nationwide had already hit 3.5 million tons. Under this high crushing pace, soybean oil output remains elevated, fueling market concerns that soybean oil inventories may be difficult to reduce rapidly.

As of December 9, domestic soybean oil inventories climbed to 1.13 million metric tons, hitting the highest level for this time of year in nearly seven years. However, the current inverted spread between soybean and palm oil prices, coupled with the traditional peak consumption season for edible oils in the fourth quarter, has kept apparent demand for soybean oil at elevated levels. This is expected to gradually ease inventory pressure going forward.

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