Soybean Oil Drops Almost One Cent Ahead of USDA Reports

Vegetable oil prices dropped on Monday, as position squaring ahead of the release of the United States Department of Agriculture’s (USDA’s) January reports and bearish cargo surveyor data weighed on prices. However, the decline in soybean oil prices was substantially larger than palm oil, pushing the spread between March contracts to about 12 basis points, despite a four percent rally in the dollar’s value versus the Malaysian ringgit in the last four days. One of the reasons for the outperformance of palm oil futures has been the rally in energy futures over the past week.

On Monday, relatively steady energy prices left the spread between soybean oil and heating oil futures lower for the third consecutive day. At $1.67 per gallon, the HOBO spread remains historically high, but it settled just below the…