Palm Oil Rally Continues to Narrow Spread to Soybean Oil

Palm Oil Rally Continues to Narrow Spread to Soybean Oil

Palm Oil Rally Continues to Narrow Spread to Soybean Oil

The spread between soybean oil and palm oil for the August contracts fell to parity on Friday as vegetable oil markets remained mixed. It is the first time the spread has reached parity since early 2020, when the spread traded around parity for about three weeks. Palm oil prices continue to rally on momentum flows and concerns about production, while soybean oil has been under pressure from producer hedging and fund spreading. Given the fundamental situation and the fact that historically the spread has not been able to hold at that level for a substantial length of time, it seems the spread will likely revert closer to the mean in the coming weeks. However, whether higher soybean oil prices or lower palm oil prices drive the reversion remains in question.

Soybean oil futures were narrowly mixed, but most…

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