Vegetable Oil Futures Set New Life-of-Contract Highs

Vegetable oil prices rallied sharply on Monday as an overnight rally in crude oil prices and continued concerns about South American production continued to drive prices higher. However, selling in the energy complex during the European and U.S. sessions left futures well below the highs of the day. Anecdotal reports suggesting Chinese traders had canceled Australian rapeseed cargos contributed to a sharp rally in Chinese vegetable oil prices, which provided a bullish backdrop throughout trading on Monday.

The spread between soybean oil and palm oil contracts retreated from the highs set on Friday as the decline in crude oil weighed on soybean oil prices during the U.S. session. Still, the May contract remained above 9.5 cents per pound, and the July contract settled above 11.5 cents per pound. The weakness in crude oil…