Global soybean markets have the potential to behave very unpredictably in 2018, with several key drivers of potential price volatility. Global biodiesel policy, feed demand growth, and increasing global trade are likely to be mildly supportive prices in 2018 as global balance sheets contracts, particularly in major exporter surpluses. Despite our view of a slight YOY reduction in global ending stocks, global soybean prices in 2018 are expected to be capped by historically high inventory.

Meanwhile, Indonesian and Malaysian palm oil yields are expected to normalize in 2018. This coupled with an increase in mature palm oil plantation areas in both countries, will result in rising global palm oil production, providing downward pressure to prices in 2018. In addition, global soft oil supplies in 2018 are expected to be record high, on the back of large soybean, rapeseed and sunflower seed crops across major producing countries. Availability of these soft oils will provide competition for palm oil demand and curb palm oil price rallies.