Soybean Oil Set Fresh Multi-Year Highs After UDSA Report

On Tuesday, vegetable oil prices rallied as strong domestic demand supported soybean oil, and overnight gains in crude oil and strength in vegetable oil prices on the Dalian exchange supported buying in palm oil. The rally left the benchmark contracts for both markets at new life-of-contract highs. Strong demand from Chinese buyers and renewable fuel producers in the U.S. will likely continue to support World vegetable oil prices in the coming weeks, limiting downside price risks. The only significant potentially bearish catalyst is South American production. As farmers harvest the South American crops and send their output to the crusher, the relatively short-term increase in supply relative to demand could weigh on prices. However, given the delays in the Brazilian harvest and concerns about crop losses in Argentina due to hotter and drier-than-normal…