Soybean oil is, generally, classified under vegetable oils. The applications of soybean oil are numerous and it is currently witnessing high demand from industries like the painting sector, where it is used as a drying oil. The growing importance of soybean oil in the food industry has resulted in the market’s high growth across various geographies. However, soybean oil manufacturers in the US are facing challenges in the form of market dynamism, which is due to recent soybean oil price fluctuations, and changing import policies of foreign countries. Therefore, investors who are looking to profit in the market can do so by analyzing the factors affecting soybean oil price and investing in risk mitigation strategies.

To help soybean oil manufacturers thrive in the competitive US market, our team of experts at SpendEdge has highlighted five significant factors affecting soybean oil price.

Wondering how to maximize cost savings in the soybean oil market? Get in touch with our experts now.

Factors Affecting Soybean Oil Price in the US

Factor #1: US soybean production

The growing production of soybean in the US is a matter of concern for most companies. With the increase in production, soybean oil price can be expected to drop due to fears over a glutted market. This can negatively impact the growth of the soybean oil market. Also, in future, there is a dip in the soybean production, it is likely that the soybean oil price will increase, mostly in response to the inbuilt fear that supplies might not be sufficient to fulfill demands.

Factor #2: Alternative vegetable oils

The availability of other cooking oils also affects the soybean oil price. Fundamentally, the availability of other cooking oils reduces the reliance on this oil as cooking oil and this put pressure on the oil price. In other words, if for some reasons, the production of other major cooking oils, like corn oil, coconut oil, and palm oil, dips, there are high chances that the soybean oil might benefit from the situation by the increase in demand.

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Factor #3: US export data

Export data usually indicates inventories. When there is a rise in the export of soybean, chances are that inventories decrease. This creates a concern that the available soybean might not be sufficient to produce enough soybean oil to satisfy the demand in the US. Consequently, the soybean oil price goes up. On the other hand, if exports are less, the soybean oil price may dip in response to the prospects of a glutted market.   

Factor #4: Effect of Climate

Fundamentally, if the production of soybean is affected by any factor, the price of the oil too will get affected. Climate is one of such factors. Cultivation of soybean requires hot summer, with temperature ranging between 20 and 30°C. But temperatures below 20°C or above 40°C brings about stunted growth. If there is any fluctuation in temperature or climate, the soybean oil price tends to fluctuate. 

Factor #5: Fuel prices in the U.S

Fuel price is one of the important factors affecting the soybean oil price. If there is an increase in fuel prices, the cost of production will increase. This forces the soybean oil price to go up. However, this is not a yardstick to predict that falling fuel prices would automatically lead to a decline in soybean oil price in the US or in any part of the world. Manufacturers, therefore, need to monitor the market and adapt to the best practices to maximize profit. 

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