Palm oil futures rose about one percent (November contract +21 ringgit per tonne) on bullish data from the Malaysian Palm Oil Board (MPOB) that outweighed bearish trade data from cargo surveyors

Buying below the 10-day and 20-day moving averages also helped support futures, which settled at the highest level since August 30. The MPOB reported palm oil inventories declined to the lowest level since July 2018, but cargo surveyor data indicated that palm oil shipments from Malaysia during the first 10 days of September fell about 19 percent from the same period in August. Traders are likely to increasingly focus on export demand in the coming weeks as India is set to raise its tariffs on palm oil imports from Malaysia in October, which is expected to reduce shipments to the largest vegetable oil importing country.

Vegetable oil futures on the Dalian exchange were mixed with soybean oil futures down about 1/4 percent (January contract -16 yuan per tonne) and palm oil prices narrowly higher (January contract +2 yuan per tonne). A decline in soybean futures contributed to the losses in soybean oil contracts, which were also pressured by technically-driven selling at the 10-day moving average. Buying at the lower Bollinger band helped limit the decline in soybean oil prices, which remain in the same consolidation range of the last two weeks. Technical buying at the 10-day and 20-day moving averages helped support palm oil prices, which are also consolidating recent gains.

Canola futures settled lower for the sixth consecutive day with most contracts down about 0.1 percent (November contract -C$0.40 per tonne). Selling at the lower Bollinger band and the psychologically important C$440 level weighed on canola values and drove the November contract within C$0.20 of the intra-day low set July 5. Burdensome stocks and pressure from the advancing harvest continue to provide a bearish tone to the canola market, which set fresh life-of-contract closing lows on Tuesday.

On the Matif exchange, nearby rapeseed futures were marginally higher (November contract +€0.50 per tonne), but gains in deferred futures were larger with many contracts gaining more than 1/2 percent (November 2020 contract +€2.25). The rally left the November contract tied with the life-of-contract high set on September 5, but the intra-day high, which was €0.25 above the settlement, was €1.75 below the intra-day high set on September 5.

TRADE OPTIMISM DRIVES SOYBEAN FUTURES HIGHER, BUT FUND SPREADING LIMITS GAINS IN SOYBEAN OIL

Soybean futures shot higher on Tuesday following a story in the South China Morning Post (SCMP) that said Chinese buyers are expected to agree to purchase more agricultural products from the United States in advance of a trade deal. The rally left most contracts up more than 1 1/2 percent (November contract +14 1/4 cents per bushel), but the most actively traded contract found resistance at the upper trend line and settled 2 3/4 cents below the high of the day. The story in the SCMP also triggered a sharp rally across the agricultural space with most commodities gaining more than 1 1/2 percent. Funds were reported buyers of 7,000 soybean contracts 4,500 soybean meal contracts and 3,500 soybean oil contracts.

Meal/oil spreading by funds limited the gains in soybean oil futures, which settled about 1/4 percent higher (December contract +8 basis points per pound). The lack of progress in crafting a deal to raise biofuel usage in the U.S. continued to weigh on soybean oil futures, but optimism about the plan contributed to resistance when traders tried to drive the December contract below the lower trend line formed by the lows set on August 7, 28 and 29. Selling at the 10-day moving average also provided resistance when prices tried to rally with the soybean market, which left December futures to settle close to the opening price, 22 points above the daily low, and 13 points below the daily high. If soybean futures continue to rally, soybean oil futures may continue to find support, but strength in lean hog futures could trigger additional meal/oil spreading, especially if President Trump does not announce his biofuels program in the coming days.