Selling Across Commodities Drives Veg Oils Sharply Lower

Broad selling across commodities drove vegetable oil prices sharply lower on Thursday. Across grain, oilseed, energy, and livestock markets, only a few contracts did not decline in price on Thursday. However, despite the sharp declines, the backwardation in the soybean oil curve continued to steepen, at least for contracts with deliveries during the 2020/21 marketing year. The relatively limited decline in nearby contracts suggests domestic demand remains robust, and as noted in Wednesday’s bulletin, the recent drop is likely to accelerate the demand for biofuel feedstocks.

Crude oil prices dropped for the fifth consecutive day and fell more on Thursday than any day since last June when the nearby contract briefly traded at a negative price during delivery. The plunge in energy prices drove the spread between soybean…