The United States and India have reached a temporary trade agreement framework, with India promising to reduce or eliminate tariffs on several American products. This positive development has boosted the prices of Chicago soybean oil futures to their highest level in over six months on Monday, February 9.
According to a joint statement released by the US and India last Saturday, the two countries have reached a “mutually beneficial” temporary trade agreement framework.
The most active soybean oil contracts on the Chicago Board of Trade (CBOT) surged by 1.9% in intraday trading, reaching a new high not seen since July last year.
Last week, US President Trump stated that India will purchase over $50 billion worth of American goods, including agricultural products. Market analysts point out that as the largest importer of edible oils globally, importing around 16 million tons of vegetable oil annually, this agreement will give American suppliers the opportunity to compete for market share against South American competitors like Argentina and Brazil.
In addition to soybean oil, India will also open its market to various American agricultural products, including apples, oranges, almonds, walnuts, distiller’s dried grains with solubles (DDGs), feed-grade sorghum, as well as wines and spirits.
Currently, American soybean oil holds only about 2.2% market share in India’s import market (approximately 106,000 tons).
Sandeep Bajoria, the CEO of vegetable oil brokerage firm Sunvin Group, stated that once the details of the agreement are finalized, soybean oil prices from the US could further rise, and the agreement might lead to India reducing its purchases from South America.
Facing potential agricultural impacts from tariff reductions, Indian Commerce Minister Piyush Goyal emphasized on the X social media platform that, “In all trade negotiations, the interests of our farmers are always the top priority. The Modi government will do everything to protect our food providers and ensure rural livelihoods.”
He mentioned that while seeking preferential access for Indian goods under the framework of the “India-US temporary agreement,” India has not made concessions in sensitive agricultural sectors such as grains, fruits, vegetables, spices, dairy, and meat.
Despite the bullish outlook for American soybean oil, analysis also indicates that the current price of Malaysian palm oil, which is about $100 cheaper per ton than soybean oil, will continue to support demand in the short term.
The specific details of the future implementation of the US-India agreement and any “additional product lists” will be the focus of attention in the global commodities market.