Vegetable Oil Futures Rally on Gains in Oilseed Prices

Soybean oil prices continued to move higher on Thursday in a holiday-shortened session. However, palm oil prices were mixed again as spreading supported the front end of the curve. The benchmark contracts in both markets set fresh life-of-contract highs. Gains in deferred soybean oil contracts were also smaller than the front end as heavy spreading in soybean futures influences the soybean oil curve’s shape. The July – November soybean spread has jumped by more than 55 percent in the last two weeks. The July – November spread is likely the most popular speculative spread. It reflects the concerns about Argentine dryness, robust U.S. exports, and expectations that the 2020/21 U.S. soybean carryout will fall to the pipeline level. The Jacobsen’s stocks-to-use ratio suggests the spread could potentially double from its current level, potentially driving…