The vegetable oil complex is a flotilla of boats navigating the tide in a pattern that for the most part keeps individual members—soybean, palm, sunflower, canola—relatively close together. Each major oil type has a relatively steady price relationship with others in the complex based on global supply and demand. Historical trends show they all remain sailing in the same general direction over time, with similar price patterns despite occasional fluctuations based on world events. Understanding the global vegetable oil complex starts with a firm grasp on the fundamentals underpinning prices for different specific oils.
The tides on which those boats sail have changed; the world vegetable oil market is much different today than it was two years ago, and farmers and the entire soybean industry is responding to changing market signals to meet global demand. The COVID-19 pandemic, war in Ukraine and volatile weather for oilseed farmers have changed global supply chains. Those chains have stretched and sometimes broken altogether while oil demand trends higher. The boats are still sailing together, but their speed and direction doesn’t always follow past trends. And the soybean industry is stepping into a leadership role in meeting oil demand based on current market conditions.