Price of oilseeds

Oilseeds are primarily processed into vegetable oil, where they compete with soybean-based vegetable oils. The soybean-based oils dominate this market, so the price of oilseeds moves primarily in response to changes in the price of soybeans. As soybean prices go up, purchasers will shift more of their expenditures to other oilseeds and this helps influence the prices of those oilseeds to go up. From the Energy Independence and Security Act greater use of biofuels were realized and in turn, led to oilseeds prices to move more in line with the price of crude oil. High oil prices supported demand for biodiesel from soybeans as the primary source. In turn, demand rose for the relatively cheaper canola- and sunflower-based oils, increasing the price of the respective seeds. A portion of canola and sunflower harvests are also converted to biofuel, but this fraction is too small to impact general oilseed prices on its own. Nonetheless, competition with ever-more-expensive soybeans has forced their price up.

The recession of 2008 and 2009 halted the rapid boosts in oilseed prices. Consumption of most goods fell during this time as consumers tightened their spending in response to the faltering economy. Along with the lower demand for vegetable oil, the price of petroleum dropped, which filtered through the price of soybeans to place downward pressure on the price of oilseeds. In turn, oilseed price growth slowed to 1.5% in 2009 following the onset of the recession in late 2008. Although the trend continued in 2010 with a 26.0% price drop, it reversed in 2011. Global demand for vegetable oil rose in response to the slowly recovering economy. In addition, oil prices rose strongly again, which pushed up biodiesel demand, driving up the prices of soybeans and their substitutes. In turn, the price of oilseeds rose 38.5% in 2011.

The record drought in 2012 also lowered crop yields, pushing up prices by 25.7% over the year. However, oilseed crop yields normalized in 2013 a more moderate demand for ethanol and biofuel caused prices to slump by 3.7%. In 2014, prices fell an additional 19.0% as demand from biofuel production flat-lined and oilseed production increased, pushing supply upwards. These trends prevailed over 2015 and 2016 as crude oil prices remained depressed, which stifled demand for biofuels. In 2017, despite more substantial oil prices, which aided soybean prices, oilseed prices continued downward. However, the rate of inclines was much lower. In 2017, canola imports nearly doubled and domestic output increased. Nonetheless, ending stocks were lower, which suggested that demand was relatively high and kept prices from decreasing more significantly. In 2018, the price of oilseeds increased amid increased demand in developing countries.

In 2020, prices increased slightly as demand fell in response to a slowed economy amid the COVID-19 pandemic. As the economy began to reopen in 2021 as increasing vaccination rates propelled business activities, prices surged, growing 19.5%, which was driven by rising demand among downstream industries that reopened in the time, such as dining establishments, which helped grow demand for cooking goods such as vegetable oil. In turn, operating costs for producers grew in the period to satisfy the influx of manufacturing activity as the industrial production index grew in 2021, according to IBISWorld estimates, as prices increased to reflect these levels. Prices stemming from these pressures brought on by the pandemic, rising production issues and abysmal weather also contributed to lower production rates and, in turn, lower ending stocks in the 2019-2020 period, which, while production levels alleviated in the following seasons, ending stock rates remained below pre-pandemic levels according to data from the USDA. In turn, because of these pressures, domestic producers struggle to fully rebound their operations to having both higher stocks while satisfying higher demand as higher demand cuts into their stocks, which keeps their prices high, especially as export and import levels in the United States bounce back in the post-pandemic years.

In 2022, prices grew at a more exponential rate of 66.7% as supply chain disruptions experienced in the previous year only grew, which added more pressure onto producers to both expand and produce more, while other factors such as the Ukraine war added onto supply chain issues by raising the price of energy in the same period. Hefty expansions in the price of soybeans also influenced prices in the year, with downstream markets having to contend with higher prices on a more holistic scale. However, in 2023, oilseed prices fell by 12.0% as various factors, like dramatic inclines in the price of soybeans in the year along with slight alleviation in energy prices, according to IBISWorld estimates, helped tempered the cost of these inputs. Oilseed prices declined by 14.0% in 2024, following a year of strong production. This robust output is expected to help lower prices by an additional 7.0% in 2025, even with the possibility of new tariffs. However, protections provided by the USMCA for goods grown in North America shield these products from potential US tariffs. As a result, oilseeds imported from within North America can continue entering the US market, helping moderate price increases by filling any supply gaps from domestic sources.