Veg Oils Rally on Oil/Meal Spreading, Slowdown in Output

Global edible oil prices rallied on Wednesday, as fund oil/meal spreading and bullish cargo surveyor data drove buying. Soybean oil futures on the Dalian Exchange in China hit their highest level since 2012, and this added to the bullish tone.

U.S. benchmark soybean oil futures climbed for a sixth straight session and reached a near three-month high just below 65 cents before settling 20 basis points below the peak, or 3.7 percent higher (December contract +231 basis points per pound). Gains for contracts at the back end of the curve were not as steep, rising less than three percent on bull spreading (July 2022 +156 basis points per pound). Tight global vegetable oil stocks and expectations for rising demand from U.S. renewable diesel producers remain supportive for soybean oil markets. However, the likelihood of a larger-than-expected soybean crop in Brazil presents a downside price risk for…