Argentina soybean oil gains as Brazil premium narrows amid fresh supply data

South American soybean oil markets experience shifts in late September, with Argentine prices climbing while Brazilian prices retreat amid updated supply figures. CBOT October soybean oil futures close at 69.88 cents/lb on September 15, down 0.34 cent/lb from the previous week. The market sees a noticeable decline in Chicago Board of Trade soybean oil futures, which bottom at 69.88 cents/lb on September 15, falling 0.48% from 70.22 cents/lb on September 8.

The volatility in futures is evident as they reach a high of 71.41 cents/lb on September 10, before sliding 3.11% on September 11 following reports from the USDA. The USDA boosts its forecast for US soybean production to 4.535 billion bushels for 2026, with an average yield of 52.8 bushels/acre. The USDA also concedes a reduction of 10 million bushels in projected US soybean ending stocks to 310 million bushels, after factoring in increased export expectations.

Fresh US processing data from the National Oilseed Processors Association (NOPA) indicates soybean crushing in August at 205.46 million bushels, a modest 8.24% increase from the previous year but 5.17% below the level observed in July. USDA's revised estimate for US soybean stocks at 310 million bushels provides a significant input into the market dynamics.

Meanwhile, in Brazil, the national agricultural supply agency, Conab, reports a slightly reduced soybean crop estimate at 180.4 million metric tons for the 2026/27 season, a drop of 60,000 metric tons from the agency's previous estimate.

Against a backdrop of a slightly weaker CBOT, Argentine FOB values strengthen, even as Brazilian prices soften and the premium for Brazilian soybean oil over Argentine oil narrows significantly. Platts sets Argentine soybean oil FOB Up River for October loading at $1,223.13/mt on September 15, up $5.74/mt or 0.47% from the prior week.

The October basis strengthens by 60 points, reaching -1,440 points against CBOT October futures, from the previous week's -1,500 points. This stronger differential overpowers the futures contract's decline, resulting in a rise in Argentine outright prices. In contrast, Brazilian FOB Paranaguá for October loadings falls to $1,227.53/mt on September 15, down $7.50/mt or 0.61% from $1,235.03/mt on September 8.

The October basis remains unchanged at -1,420 points against CBOT October futures, resulting in a narrowing of Brazil's October premium over Argentina to just $4.40/mt, down from $17.64/mt on September 8. The relative basis levels between the two origins also narrow to just 20 points from 80 points previously. Additionally, Brazil's November market experiences a decline, with FOB Paranaguá falling to $1,224.67/mt, while the November basis strengthens by 10 points to -1,480 points against CBOT December futures.

The week-long period thus depicts a more pronounced strengthening of Argentine soybean oil, buoyed by a robust Up River basis and bolstered by a higher overall price level despite a decline in CBOT futures. Brazilian prices, on the other hand, fall and align more closely with Argentine levels, significantly eroding the premium that had characterized the Brazilian market over its Argentine counterpart in the previous week.