Soy rose to its highest level in more than two years after strikes by the U.S. and Israel on Iran. (Clayton Steward/Bloomberg)
March 2, 2026 11:31 AM, EST
Key Takeaways:
- Soybean oil and soy futures hit more than two-year highs as crude prices surged following U.S. and Israeli strikes on Iran.
- Higher crude prices boosted demand expectations for biofuels, lifting vegetable oils and sugar as analysts cited freight disruptions and shifting mill output.
- Traders warned that rerouted vessels and higher freight rates could strain supplies and alter trade flows, particularly for Gulf Cooperation Council nations.
Soybean oil jumped to a two-year high, leading gains across agricultural commodities, amid expectations that soaring crude prices will boost demand for biofuels.
Soy rose to its highest level in more than two years after strikes by the U.S. and Israel on Iran. Contracts in Chicago surged as much as 3.9% before paring some gains, though the most-active contract remains on track to advance for a sixth straight session. White sugar reached a one-month high, while other vegetable oils, including palm and rapeseed, also rallied.
Higher crude prices typically make alternative fuels such as biodiesel more attractive and increase demand for vegetable oils and ethanol made from corn or sugar. Crude spiked before trimming what had been its biggest surge in four years.
“The veg oils market, including soybean oil, has picked up a tailwind from the strength we have seen in crude oil,” said Matt Darragh, grains and oilseeds analyst at Kpler.
Benchmark palm oil prices in Kuala Lumpur climbed as much as 2.7%, and Paris rapeseed hit its highest level in more than six months.
The conflict has also triggered concerns about prolonged disruptions in the Strait of Hormuz.
“Vessels heading to the Middle East are avoiding those routes or demanding higher freight rates, which could increase vegetable oil prices for Gulf Cooperation Council nations and affect trade flows into the region,” said Mayur Toshniwal, president and head of trading at Emami Agrotech Ltd., an Indian vegetable oil processor and biodiesel maker.
In softs, raw sugar rebounded in New York as higher oil prices mean mills in top grower Brazil may tilt further toward ethanol production at the expense of the sweetener. White sugar futures rose as much as 3.3% to $421 a ton in London, the highest in nearly a month.
“We have sugar refineries in the region that will not manage to import raw sugar and they will not manage to export refined sugar,” said Claudiu Covrig, the lead analyst at Covrig Analytics.
Eleanor Thornber, Ben Westcott and Mumbi Gitau contributed to this report.
