Plunge in Crude Oil Drives Vegetable Oil Prices Lower

Vegetable oil prices dropped sharply on Friday as plunging crude oil prices caught traders’ attention. Crude oil fell nearly four percent, which left the benchmark October contract below the psychologically critical $40-per-barrel level. The decline in crude oil prices during the week was the largest weekly drop since June. Concerns about a slower-than-expected economic recovery and the lack of progress in negotiations for another stimulus package have driven the move lower. Also, slowing domestic gasoline demand and rising distillate inventories in Asia have also contributed to the bearish tone in the crude oil market.

Soybean oil prices dropped nearly 1 1/4 percent (December contract +40 basis points per pound). Selling at the 33.5-cent level and the continued fund liquidation of long oil share positions…