Vegetable Oil Prices Mixed

World vegetable oil prices were mixed on Tuesday as crude traded around unchanged. The soybean oil and palm oil markets moved in different directions with palm oil playing a bit of catch up to the recent move in soybean oil, and technically-driven selling weighed on soybean oil. A surprise draw in crude oil inventories, which included a record drawdown in Cushing inventories, may provide some support for crude oil, and by extension, world vegetable oil prices on Wednesday.

Soybean oil futures fell about 3/4 percent (July contract -23 basis points per pound) on technically-driven selling above the upper Bollinger band, which drove the July contract to settle just below that level. The most actively traded July contract tested the 27-cent level but managed to move back above it by the end of trading. If crude oil continues to rally in the near term, soybean oil will likely follow. However, the upper Bollinger band will continue to provide resistance over at least the next several days.

Nearby palm oil futures gained another two percent (July contract +45 ringgit per tonne) following an announcement about the biofuel program in Malaysia. The Indonesian government reaffirmed its commitment to its B30 program on Monday, contributing to sharp gains in nearby contracts. On Tuesday, the Malaysian government followed and said, in September, it would restart the B20 program suspended in reaction to the coronavirus pandemic. Gains in deferred contracts were smaller for the second consecutive day, reflecting the expectation that palm oil stocks will continue to build throughout the balance of the year.