Vegetable Oil Prices Mixed Despite Crude Rally

Vegetable Oil Prices Mixed Despite Crude Rally

Vegetable Oil Prices Mixed Despite Crude Rally

Vegetable oil prices were mixed as a rally in crude oil prices supported soybean oil values, while profit-taking in the palm oil market left futures lower. Crude oil prices rallied sharply following the announcement of an agreement between members of the European Union on a fiscal package to aid the economic recovery from the pandemic. However, futures sold off from the intraday highs late in the morning, which pressured soybean oil prices and left futures to settle about 3/4 percent below the high of the day.

Soybean oil prices rose a little less than 1/2 percent (September contract +13 basis points per pound) to settle at a new post-coronavirus high. Buying at the 200-day moving average provided support and left futures closer to, but still above, the upper Bollinger band. The strength in crude oil prices and expectations of better economic conditions in Europe may continue to provide support for prices in the short term. As the upper Bollinger band moves higher, the technical pressure is likely to wane, which may also allow prices to remain above the 200-day moving average.

Palm oil futures fell between 3/4 and one percent (October contract -20 ringgit per tonne) on profit-taking. Selling just below the key psychological level of 2,700 ringgit contributed to the weakness. The decline left prices just below the upper Bollinger band, which, like the soybean oil market, may provide some relief from technically driven selling in the short term.

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