Soybean Prices Rise Amid 7.6 Percent Soy Oil Surge and Geopolitical Tensions

Global oilseed prices rose last week, driven by a 7.6% surge in soybean oil futures and a sharp increase in crude oil prices. Market optimism surrounding US biofuel policies has boosted expectations for domestic crushing demand, despite pressure from a record South American soybean harvest.

On June 20, November soybeans on the Chicago Board of Trade (CBOT) closed at $10.6075 per bushel, up 0.6% from the previous week. Soybean meal fell 1.7% to $298.1 per short ton, while soybean oil reached 55.1 cents per pound, marking a 20-month high. In Europe, rapeseed futures rose 2.1% to 505.25 euros per ton, and Canada’s canola futures climbed 2.7% to 742.7 CAD per ton.

US farmers have planted 93% of their soybean acreage, slightly below the 94% five-year average, with over 5.8 million acres still unplanted. Soybean crop ratings fell by 2% last week to 66% good-to-excellent, with sharp declines in Louisiana (-9%) and Wisconsin (-7%).

Extreme heat across the US Midwest, with temperatures exceeding 100°F (37.8°C), could impact crop conditions, though soybeans will enter their critical yield phase in August. The USDA predicts 2025/26 soybean yields will average 52.5 bushels per acre, supporting a projected year-end stock of 295 million bushels, down 15.7% year-on-year. However, any yield reductions could cut ending stocks to their lowest levels in 12 years.

Tensions in the Middle East have further added to market volatility. Over the weekend, a US airstrike targeted Iranian nuclear facilities, prompting Iran to announce plans to close the Strait of Hormuz, a key oil shipping route. This could trigger a crude oil price spike, indirectly supporting soybean and soybean oil prices.

Despite these factors, analysts note that biofuel policy benefits may already be priced in, and rising crude oil could ultimately dampen economic growth, hurting agricultural demand.