Insight Focus
Ceasefire sends energy and vegetable oil prices lower. Soybeans remained near pre-war levels as US–China trade uncertainty and Brazil’s record crop outweighed spillover from energy markets. Growing Brazilian supplies, weaker Chinese demand prospects, and expanding US acreage point to continued downward pressure.
Cease-Fire Hits Energy and Vegetable Oils, Soybeans Hold Steady
Immediately following the April 7 announcement of a two-week cease-fire in the Iran war, there were double-digit declines in crude oil and diesel prices, but soybean oil declined by only 3–4%, and there was little change in soybean or soybean meal prices. Meanwhile, another large Brazilian export campaign loomed over the market.
Soybeans are tied to the disruption of petroleum markets mainly through soybean oil’s use for biodiesel and its role as a substitute for palm oil—one of the food commodities most exposed due to Indonesia’s growing biodiesel program. Palm oil futures had risen 17% since the Iran war began, and Chicago soybean oil prices had risen 14%. China’s soybean oil, held down by ample supplies after record crush volumes last year, had risen only 6%.
Less than a day after President Trump’s announcement of the ceasefire, all three vegetable oil futures prices had declined by 3–4%. These declines reversed the 5% increase in vegetable oil prices worldwide for the month of March estimated by the UN’s FAO.
Note: Futures prices for May 2026 delivery, February 27 through April 8, 2026.
By comparison, soybean prices were not far from their pre-war levels, as US–China trade tensions and a record-large Brazilian crop were the main market drivers. Soybean prices had risen in early March on prospects for a US–China summit that was expected to include additional Chinese commitments to buy US soybeans.
A steep drop in prices on March 16, attributed to news that the summit would be delayed (now planned for May 14–15), was the biggest event for soybeans. After that drop, Chicago and US Gulf FOB soybean prices were remarkably stable, fluctuating within a narrow band of USD 11.55-11.75/bushel. Prices on the Chicago exchange were still in that range the day after the ceasefire was announced.
Record Brazilian Crop Pressures Prices, Exports Shift from China
Brazilian soybean prices have been under supply-side pressure due to that country’s record-large crop. As the harvest proceeded in Mato Grosso State—Brazil’s top soy-producing region—the average producer price fell from a November 2025 peak of BRL 120.81/60kg bag to BRL 102.6/60kg bag in February 2026. The Mato Grosso price rebounded in March but was still about 5% below its year-earlier level.
Source: CONAB
Brazil’s soybean crop entered the global market during March, as Brazil exported 14.5 million tonnes, down slightly from 15.66 million tonnes a year earlier. Brazil’s exports for the first three months of 2026 totalled 23.47 million tonnes, up from 22.16 million tonnes during the same period last year.
China was the destination for 9.97 million tonnes of Brazil’s soybean exports in March 2026, a 69% share. The EU—primarily Spain and the Netherlands—was the second-leading destination with 1.2 million tonnes, an 8.4% share. Other destinations with shipments exceeding 185,000 tonnes included Turkey, Mexico, Thailand, Bangladesh, Pakistan, Vietnam and Taiwan. An additional 1 million tonnes combined was shipped to 12 other destinations.
Source: COMEX
Brazil’s soybean exports to China during March were down 1.16 million tonnes from a year earlier (reversing year-over-year increases during January and February). Meanwhile, March exports to most other destinations increased. Brazil’s March exports to the Netherlands were up 244,000 tonnes from a year earlier, exports to Mexico were up 189,000 tonnes, exports to Bangladesh were up 129,000 tonnes, and exports to Thailand were up 123,000 tonnes.
The drop in exports to China may be the result of more stringent inspections. Brazil’s agriculture ministry adopted new inspection procedures in response to complaints from China’s customs authorities about weed seeds, pesticide coatings and heat damage in Brazilian soybean shipments.
One exporter reportedly suspended purchases of Brazilian soybeans for shipment to China, two others sought clarification from Brazilian officials, and 20 or more vessels were stranded in Brazilian ports awaiting inspections. After Brazilian officials travelled to China last month, their Chinese counterparts agreed not to ease the zero-tolerance policy for weed seeds while a precise tolerance was determined, but uncertainties persisted.
China Demand Risks Rise as Supplies Surge
In China, the industry expects a reversal of the tight supply situation for soybeans, oil and meal when a surge of soybeans from Brazil arrives during May–July.
The relatively modest increase in soybean oil prices on China’s Dalian exchange during the Iran war discussed above reflects a relatively saturated market in China. China’s ability to absorb another surge of soybean oil production in 2026—if crush matches last year’s record—is limited by China’s relatively weak macroeconomy, a flagging food service sector and an aging population. With relatively soft soybean oil prices and strong international prices for palm oil, Chinese edible oil manufacturers began exporting soybean oil in 2025 and are expected to export again this year. The largest market is India.
China’s soybean meal may not be able to sustain last year’s demand either. During 2025, China’s animal feed production grew 8.6% as production of hogs and other livestock expanded aggressively. The influx of soybean meal from imported soybeans kept feed prices low, contributing to growth in feed and livestock output. Feed production was up again by 3.4% year-on-year during the first two months of 2026, but growth in livestock production and feed use may not be sustained this year.
Hog prices fell sharply during March, pushing nearly all producers into substantial losses. This is expected to result in a curbing of swine numbers and a shake-out of small and medium producers that lack the financial resources to cope with negative cash flow.
If China is unable to sustain the same level of soybean imports in 2026, the diversion of Brazilian soybean exports to other destinations in Europe and Asia seen in March may continue in the coming months, keeping downward pressure on prices. The likelihood of China raising its purchases of US soybeans is shrinking since the US–China summit will now take place with only a few months remaining in the 2025/26 marketing year. Attention will then turn to China’s pledge to purchase 25 million tonnes annually.
The supply situation in the 2026/27 marketing year may not ease, as the USDA’s first planting intentions survey reported a 3.5-million-acre expansion of US soybean acreage in 2026 to 84.7 million acres. The survey reflects a shift of acreage out of corn, which had low prices and is more exposed to rising fertiliser costs. While the survey lacks precision and preceded actual planting, it seems likely that the US will not reduce production despite the decline in US soybean exports to China.
Source: USDA
