Palm Oil/Energy Rally Drive Soybean Oil Sharply Higher

Palm oil futures defied my prediction yesterday as they rallied on Tuesday, forcing soybean oil prices to try to catch up. A sharp rally in soybean futures, which were more than 50 cents higher at one point in the day, helped support the substantial gains posted in soybean oil futures. However, fund long oil share spreading also helped lift soybean oil prices and widen the spread between the March soybean oil and palm oil contracts. Strength in the energy complex, where West Texas Intermediate (WTI) futures gained nearly five percent (February contract +$2.30 per barrel), also contributed to the bullish tone in the vegetable oil market. An announcement that Saudi Arabian producers would cut production in February and March by one million barrels per day supported the energy complex gains. The reduction lifted nearby WTI contracts above the…