Soybean Oil/Palm Oil Spread Rises to Life-of-Contract Highs

Vegetable oil prices were mixed, sending the spread between nearby soybean oil and palm oil contracts to new life-of-contract highs. The rally in the spread was primarily due to a sharp decline in the palm oil market, where nearby contracts dropped nearly five percent (May contract -146 ringgit per tonne). Slight gains in nearby soybean oil contracts (March contract +16 basis points per pound) also contributed to the jump in spreads. The move left the spread between May contracts at 8.8 cents and the March contract just above six cents. The spread between May contracts jumped by almost seven cents per pound in the past month, after trading at a life of contract low of 1 3/4 cents on January 7.

Weakness in world vegetable oil markets, including two-percent declines in soybean oil and palm oil futures on the…