How Soybean Pricing Affects Cooking Oil
Soybean oil is an essential part of the food industry, so much so, that there is a futures market for it. With the steady increase of Soybean prices since the year 2000 and the impact that Soybean cost can have on its two by-products, soybean oil, and soybean meal, there is room for concern in the food industry.
There are a variety of factors that can affect the price of Soybean, from demand, climate, and production. Any of these will create a direct impact on output and cost of the cooking oil itself.
Soya Bean, better known as Soybean, has over 2,500 forms all varying in size, shape, and color. Although native to the warmer regions of Asia, since it’s introduction in Europe in the late 1700s, it is now one of the most important beans in the world.
Soybean, often used in vegetable oil, animal feed, foodstuffs, with the United States, Brazil, and Argentina leading the exports of Soybean, while China and Japan are the leading importers.
According to Futures Knowledge, US Production data is important to the soybean oil market because the US is the second-largest producer of Soybean in the world. With an increase in US production, the price of soybean oil decreases. This effect works the other way as well, with the decline in production creating an increase in the price of Soybean oil. US Production is not the only factor to consider when it comes to the impact that Soybean pricing has on Cooking Oil.
Climate is important to the price of Cooking Oil because it affects the production of Soybean so directly. Soybean thrives in warmer climates, so hot summers are ideal for an excellent production season for Soybeans; however, extreme conditions can create a negative yield. Negative yield results in small production and turns higher prices on oil.
- Crude Oil Prices
Perhaps more surprising than the others is the impact that crude oil prices can have on Soybean. Soybean is of great importance in the biofuel sector. Therefore they have a great relationship. With an increase in crude oil prices, soybean prices become more favorable, in turn offering lower cooking oil prices.
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