Palm Oil Rises Ahead of Crucial MPOB Report

Vegetable oil prices were mixed with nearby soybean oil prices lower again, while deferred contracts rose. Palm oil prices were higher across the curve, but the largest gains were in nearby contracts. The liquidation of bull spreads in the soybean oil market weighed on the nearby contracts and supported the curve’s back end. As we have discussed before, the backwardation of the soybean oil curve did not necessarily make sense given that stocks are above year-ago levels and expected to build over the next several months. However, the return of supply from Argentine crushers may have triggered the funds’ liquidation of bull spreads.

The relative movements drove the premium for the January palm oil contract back above one cent. However, the movement in the spread between March contracts was minimal. That said, the soybean oil…