Late Session Rally Lifts Soybean Oil Futures

Vegetable oil markets were mixed on Wednesday as profit-taking weighed on palm oil futures and fund spreading drove a late-session rally that drove soybean oil futures into positive territory. The weakness in both markets occurred despite a sharp rally in crude oil prices during the overnight session. Oil futures fell during U.S. trading hours but still settled about one percent higher.

Soybean oil futures gained about 1/4 percent (September contract +5 basis points per pound) on fund spreading. Futures were lower for most of the overnight session but rallied sharply at the U.S. opening before selling in the soybean complex drove futures down to the overnight lows. Buying at the five-day exponential moving average limited the early decline. Ultimately, spreading by funds during the last two hours of trading drove prices steadily higher and left the benchmark December contract just above the psychologically important 31-cent level.

Palm oil prices declined by about 1 3/4 percent (October contract -51 ringgit per tonne) on profit-taking triggered by the decline in soybean oil prices in the U.S. and Chinese markets. Expectations that palm oil shipments slowed sharply during the first five days of August also contributed to the weaker tone. However, buying at the five-day exponential moving average limited the decline.