On May 18th, soybean and oil futures prices showed divergent trends. Soybean No.1 futures halted their decline and rebounded, with prices facing resistance at the intersection of the 5-day and 60-day moving averages and little change in capital flow. Soybean No.2 futures also stopped falling and rose, encountering resistance at the 5-day and 10-day moving averages, with stable capital movement. Soybean meal futures rebounded but were capped by the 60-day moving average, accompanied by a position reduction exceeding 20,000 lots. Oil futures prices generally trended upward. Soybean oil futures opened lower and closed higher, breaking through the 60-day moving average resistance but facing pressure at the 5-day moving average, with an 8,000-lot reduction in open interest. Palm oil futures rose over 1.5%, surpassing resistance from both the 5-day and 60-day moving averages, alongside an increase of 16,000 lots in open interest. Rapeseed oil futures were weaker and volatile, with their rebound capped by the 60-day moving average and a reduction of 13,000 lots in open interest.
In the soybean market, sentiment towards U.S. soybeans was dampened, primarily pressured by weak export sales and a further upward revision of Brazil's record soybean production, leading to a collective decline in domestic soybean meal markets. Domestically, with the concentrated arrival of Brazilian soybeans, the supply of crushable soybeans at oil mills is gradually increasing, and operating rates are recovering from low levels. The previously consecutive decline in soybean meal inventories is expected to end its five-week streak and begin to rise. In the spot market, mainstream trader quotes followed the futures market lower, with light trading volume largely focused on executing previous contracts. However, after the sharp drop in soybean meal futures last Friday, traders were relatively active in pricing, reflecting a lack of pessimism towards short-term movements, although the basis remains weak. Overall, the soybean market is influenced by mixed factors and is expected to maintain a volatile trading pattern in the near term.
The oils market exhibits a pattern of product differentiation and near-term weakness versus long-term strength. Palm oil faces short-term pressure from Malaysia's high inventory of 2.7 million metric tons and weak exports during the production increase season, coupled with rising domestic imports and a seasonal consumption lull, keeping inventories elevated. However, medium to long-term support comes from Indonesia's B50 and Malaysia's B15 biodiesel policies, as well as El Niño-related production reduction expectations. Soybean oil is driven by the large-scale arrival of imported soybeans, leading to a recovery in oil mill operating rates and entering a seasonal inventory accumulation phase. Although there was significant trading volume for the June-September deferred contracts, the overall supply remains ample. Rapeseed oil faces a strengthened expectation of ample supply due to a surge in forward import purchases, lacking a price advantage compared to soybean oil and palm oil, with subdued spot demand.
Overall, the transmission of geopolitical conflicts and rising crude oil prices to vegetable oils has weakened, with oils returning to a fundamentals-driven outlook. With palm oil supply returning to normal and no new policy-driven catalysts, the oils sector is expected to fluctuate within a high range. The pattern of near-term weakness and long-term strength in palm oil is clear, while soybean oil and rapeseed oil are dominated by supply pressures, with demand-side seasonal weakness providing little support.
1. Industry Developments
1) In a briefing detailing the U.S.-China summit, the White House revealed that China has agreed to purchase at least $17 billion worth of agricultural products annually from the United States from 2026 to 2028. The White House stated that this $17 billion does not include China's commitment to purchase soybeans made in October 2025. Following a trade truce agreement reached after the U.S.-China leaders' meeting in Busan, South Korea, at the end of October last year, the White House said China agreed to purchase at least 25 million metric tons of U.S. soybeans annually from 2026 to 2028. Previously, China's Ministry of Commerce issued a summary of the summit, stating that the two countries would take a series of measures, including mutually reducing tariffs on certain products, but did not provide specific details, only noting that the teams from both sides were still negotiating the specifics.
The statement released by the White House on Sunday also did not mention tariff issues. The former U.S. president had previously stated that he did not discuss tariffs during his meeting with the Chinese leader. On Friday, he told reporters on Air Force One, "We did not discuss tariffs. They pay huge tariffs. We did not discuss that." The former president's two-day visit to Beijing marked the first U.S. presidential visit to China in nearly a decade. Both leaders expressed positive views on U.S.-China relations. The tariff war initiated by the former U.S. administration last year led to a significant contraction in bilateral trade and a notable decline in U.S. agricultural exports to China.
Data from the U.S. Department of Agriculture shows that U.S.-China agricultural product exports in 2025 amounted to $8.4 billion, a year-on-year decrease of 65.7%. Since the former president's first term, China has significantly reduced its reliance on U.S. agricultural products. In 2024 (the year before the former president's re-election), China's soybean imports from the U.S. accounted for 20% of its total imports, down from 41% in 2016. The White House also stated that China would cooperate with U.S. regulators to lift the ban on U.S. beef processing plants and resume poultry imports from U.S. states recognized as free of avian influenza.
On Sunday, the White House further announced that the world's two largest economies would establish a U.S.-China Trade Committee and a U.S.-China Investment Committee. China's Foreign Minister stated in a declaration last week that these two committees would address agricultural product market access issues and expand trade under a "mutual tariff reduction framework." Additionally, the White House fact sheet indicated that the two leaders "reached a consensus that Iran must not possess nuclear weapons, called for the lifting of the blockade on the Strait of Hormuz, and agreed that no country or organization should charge transit fees."
2) China's Ministry of Commerce stated on Saturday that China and the United States have agreed to expand agricultural trade by lowering tariffs and addressing non-tariff barriers and market access issues. This follows the summit between the two countries' leaders in Beijing. The Ministry stated that the agreement reached at the summit is "preliminary" and will be "finalized as soon as possible." Data from the U.S. Department of Agriculture shows that the mutual imposition of tariffs last year led to a significant contraction in trade, with U.S.-China agricultural product trade volume in 2025 decreasing by 65.7% year-on-year to $8.4 billion. Currently, Chinese imports of U.S. agricultural products still face an additional 10% tariff.
The Ministry stated that both sides aim to promote bilateral trade, including agricultural products, through measures such as mutual tariff reductions on a range of goods. However, the Ministry did not specify which goods are involved. Following a meeting last October, China resumed purchases of some U.S. agricultural products, fulfilling a commitment to purchase 12 million metric tons of U.S. soybeans before the end of February.
Additionally, China purchased some U.S. wheat and a significant amount of sorghum. Market observers expect China to reduce the 10% tariff on U.S. soybeans, which could prompt private oil mills to resume purchasing U.S. soybeans. During last year's U.S. soybean harvest, the post-tariff price of U.S. soybeans was significantly higher than South American supplies, leading Chinese private oil mills to shift to South American soybeans, with Chinese state-owned traders becoming the sole buyers of U.S. soybeans. Analysts noted that if China lowers tariffs on U.S. agricultural products, it would mark a normalization of U.S.-China agricultural trade, allowing commercial buyers to return to the market. The Ministry stated that both sides agreed to "resolve or make substantial progress" on non-tariff barriers and market access issues. The Ministry also mentioned that China would work to address U.S. concerns regarding the registration of beef processing plants in certain states and poultry exports.
3) Monthly data released by the National Oilseed Processors Association (NOPA) on Friday showed that U.S. soybean crush in April was below most market expectations, with the daily processing rate falling to its lowest level since September of last year. The report indicated that NOPA member companies processed 211.856 million bushels (equivalent to 6.356 million short tons) of soybeans in April 2026, a 6.3% decrease from 226.161 million bushels in March but an 11.4% increase from 190.226 million bushels in April last year. NOPA data showed the average daily soybean crush was 7.062 million bushels, a seven-month low.
Analysts noted that despite strong crushing margins, soybean processors began temporary shutdowns in April for seasonal maintenance and repairs after months of record-high or near-record-high crushing volumes. Last month, driven by a surge in crude oil prices due to the U.S.-Israel-Iran conflict, soybean oil prices also rose, pushing U.S. soybean crushing margins to at least a three-year high. Prior to the report's release, analysts had expected the April soybean crush to be 214.03 million bushels. Forecasts ranged from 207.65 million to 221 million bushels, with a median of 212.496 million bushels. Due to a surge in demand for vegetable oils from U.S. biofuel producers, some crushing companies have built new plants while others have expanded existing facilities, leading to a significant increase in U.S. soybean crushing capacity.
As new crushing plants join NOPA, monthly crush volumes have climbed accordingly. NOPA President stated that the March NOPA report would for the first time include data from a crushing plant in Gibson City, Illinois, acquired by NOPA member Bunge. NOPA represents over 99% of total U.S. soybean processing capacity. Calculations based on U.S. Department of Agriculture data show that soybean crushing margins at the end of April 2026 were $5.28 per bushel, up from $4.35 per bushel at the end of March. For reference, the average crushing margin for the 2025 crop year was $2.46 per bushel, higher than the $2.44 per bushel in 2024. The U.S. Department of Agriculture, in its May supply and demand report, forecasted U.S. soybean crush for the 2025/26 crop year at 2.630 billion bushels, an increase of 20 million bushels from the April forecast and up 185 million bushels or 7.57% from the previous year. The crush for the 2026/27 crop year is expected to further increase to 2.750 billion bushels.
4) The Buenos Aires Grain Exchange (BAGE) reported that soybean harvesting across Argentina accelerated significantly after a week of nearly rain-free favorable weather. As of the week ending May 13th, the harvest progress for Argentina's 2025/26 soybeans reached 57.9%, advancing 23.5 percentage points from the previous week and nearly 5 percentage points ahead of the five-year average for the same period. The primary reason was improved field conditions after reduced rainfall, creating favorable conditions for mechanical operations. The current national average soybean yield is 3.375 metric tons per hectare.
Notably, the average harvest progress for first-crop soybeans in core production regions has reached 81%, with yields consistently above the average of the past 10 years. In the central-eastern part of Entre Ríos province, yields are in line with the historical average, while other areas in the core region show higher yields. The southern core region's yield is 8% above the ten-year average, and the northern La Pampa-western Buenos Aires area is 22% higher.
Meanwhile, the harvest of second-crop soybeans has also accelerated, with average progress in two core regions reaching 60.5%, and yields close to the average of the past 10 years. In terms of crop conditions, 88% of soybean crops are rated normal to excellent. Based on the current harvest progress and yield performance, the Exchange maintained its estimate for Argentina's 2025/26 soybean production, with total output expected at 48.6 million metric tons, still below last year's 50.3 million metric tons. The soybean planted area is 17.2 million hectares, down from 18.4 million hectares the previous year.
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