Profit-Taking Ends Streak of Palm Oil Gains

Vegetable oil prices were mixed on Thursday despite the weakness in crude oil futures. Strength in the cash markets driven by a surge in demand for soybean oil from Chinese buyers is driving the recent rally. However, the sustainability of the rally is questionable, especially in the palm oil market, where analysts expect inventories to build during the balance of the marketing year.

If the reopening of the Chinese and Indian economies continues to drive import demand, the growth in palm oil stocks may not be as substantial as analysts currently expect. The direction of crude oil prices should provide an early indicator of the recovery or decline in economic activity and the direction of vegetable oil prices in the short term. However, if import demand remains strong, the correlation between vegetable oil and crude oil prices…