USDA lifts global oilseed forecast to record 723.46 million tonnes, pressuring vegetable oil prices
The USDA's September report raised the 2026/27 global oilseed production forecast by 2.44 million tonnes to a record 723.46 million tonnes, 22.42 million tonnes above the previous season. World vegetable oil output was also revised up to a record 245.37 million tonnes, and prices for palm, sunflower and rapeseed oil fell even as Brent crude rallied to $109 per barrel.
The US Department of Agriculture raised its forecast for global oilseed production in the 2026/27 marketing year by 2.44 million tonnes in its September report, to a record 723.46 million tonnes, according to UkrAgroConsult. The new figure stands 22.42 million tonnes above the previous season and adds to the supply overhang already weighing on vegetable oil quotations in the main trading hubs.
Record output on both sides of the crush
The expansion is not confined to raw material. The USDA also lifted its estimate of global vegetable oil production by 0.42 million tonnes, to a record 245.37 million tonnes, indicating that processing is expected to keep pace with the larger seed crop rather than act as a bottleneck. For crushers and refiners, the combination of more seed and more oil removes the scarcity premium that supported margins in earlier seasons.
- Global oilseed production 2026/27: 723.46 million tonnes, revised up by 2.44 million tonnes
- Year-on-year increase in oilseed supply: 22.42 million tonnes
- Global vegetable oil production: 245.37 million tonnes, revised up by 0.42 million tonnes
- Palm oil, November contract, Malaysia: 4,883 ringgit per tonne, down 1.9% in a week
- Soybean oil, December contract, Chicago: $1,550 per tonne, down 0.4% in a week
Crude oil rally fails to carry vegetable oils
Energy prices moved sharply in the opposite direction. November Brent futures gained 11.2% over the week to $109 per barrel and 22% over the month. Higher crude normally strengthens the case for biodiesel feedstock demand, but UkrAgroConsult reports that the rally has so far provided no substantial support to the vegetable oil market.
Malaysian palm oil illustrates the disconnect. November futures fell 1.9% over seven days to 4,883 ringgit per tonne, or about $1,200 per tonne. Chicago December soybean oil slipped 0.4% to $1,550 per tonne, although it remains 35% more expensive than a year ago. Physical markets were mixed: Brazilian spot soybean oil rose $10 per tonne to $1,210-1,220 FOB, while Chinese quotations held at roughly $1,360-1,370 per tonne.
Sunflower and rapeseed oil lead the decline
Sunflower oil continued to lose ground. In India, bid prices fell $10 per tonne over the week to $1,430 CIF Mumbai as supply from the Black Sea region increased. The move in Ukraine was far sharper: demand prices dropped by about $100 per tonne to $1,100-1,120 with delivery to Danube ports, under pressure from heightened risks to port logistics and rising freight costs.
European rapeseed oil also weakened, losing $10-20 per tonne to $1,435-1,440 FOB Netherlands. Competition from cheaper Ukrainian material is reinforcing the trend, with Ukrainian rapeseed oil quoted at $1,190-1,200 per tonne DAP on the Ukrainian-Polish border. The spread between the two origins leaves European crushers competing with imported oil priced well below the regional benchmark.
What the market is watching
Market participants expect the seasonal increase in oilseed supply to continue pressuring vegetable oil prices, UkrAgroConsult reports. The harvest peak in the Northern Hemisphere coincides with the record balance sheet published by the USDA, leaving importers in India and China with the option to buy on a falling market rather than cover forward. For exporters in the Black Sea region, the immediate constraint is not crop size but the cost and risk of moving the oil, which is currently reflected in the widening discount on Ukrainian sunflower and rapeseed oil against European and Indian benchmarks.
