Refined Soy Oil
Soybean oil is one of the most important edible oil used in India. Soybean oil in its crude form is the second most traded oil in international market after palm oil. Degummed (Crude) and Refined soy oils are the two traded forms of the commodity in the spot as well as futures markets. In India, soybean arrival starts from early October. Crushing for oil and meal starts in October and peaks during the subsequent two-three months.
Nearly all soybeans are processed for their oil. Soybean oil is used in cooking and frying foods. Margarine is a product made from soybean oil. Salad dressings and mayonnaises are made with soybean oil. Some foods are packed in soybean oil (tuna sardines, etc.) Baked breads, crackers, cakes, cookies and pies usually have soybean oil in them.
Soy-based lubricants are as good as petroleum-based lubricants, but can withstand higher heat. More importantly, they are non-toxic, renewable and environmentally friendly. The high-protein fiber (that which remains after processing has removed the oil) is toasted and prepared into animal feed for poultry, pork, cattle, other farm animals and pets.
Of the total global vegetable oil production Soybean oil production accounts for 27.4%; whereas of the total vegetable oil consumption Soybean oil consumption accounts to 27.7%. The production of Soybean Oil has increased from 35.88 MMT in 2008-09 to 37.93 MMT at a growth rate of 5.7%. On the other hand, consumption of soybean increased from 35.78 MMT in 2008-09 to 37.65 in 2009-10 MMT registering a growth of 5.22%. Increasing price competitiveness and increasing usage of palm oil have given way to widespread soybean oil growth - both in terms of production as well as consumption.
United States is the major producer of soybean oil in the World. It accounts for approximately 23% of World soybean oil production followed by China (21%), Argentina (18%) and Brazil (16%).
China is the major consumer and importer of soybean oil in the World. It accounts for approximately 19% of World soybean oil consumption. Followed by India (12%), US (8%) and Indonesia (4%)
Argentina is the major exporter of soybean oil in the World, followed by United States, Brazil and EU-27 nations.
India is the net importer of Soybean Oil. The imports of Soybean Oil have increased from 12% in 2007/08 to 15% in 2009/10 of the total edible oil imports in India. India’s Soybean Oil production declined from 1.45 mn tons in 2007/08 to 1.1 mn tons in 2009/10. On the other hand consumption of Oil has increased from 2.3 mn tons in 2007/08 to 2.5 mn tons in 2009/10. The gap between the production and consumption is met by importing the Soybean Oil.
Factors influencing Soybean oil Price
Indian Soybean Oil prices are highly correlated with the CME prices. On a broader scale, the following factors affect Soybean Oil prices.
- Production dependence upon agro-climatic conditions e.g., rainfall, temperature etc.
- Concentration of production base in few countries (USA, Argentina, Brazil) as against its widespread consumption base
- Its close link with its internationally traded substitutes (Palm, Mustard oil), and its base raw material (soybean) in addition to its co-derivative (soy meal)
- The crush margin between Oil, Meal and seed
- Government Import Policy
- The nature of the existing long drawn value chain