Funds Drive Soybean Oil Prices Sharply Higher

Vegetable oil prices were sharply higher on Wednesday as bullish world vegetable oil fundamentals supported palm oil and soybean oil prices. Funds adding to long oil share positions also contributed to the strength in soybean oil futures. Tightening world vegetable oil stocks, particularly in edible oils, including rapeseed/canola oil and sunflower oil, continue to support both markets and will likely provide the justification for additional gains in the short term. The rally occurred despite a sharp decline in crude oil prices, which fell more than three percent. The decline left the benchmark October contract below the psychologically critical $42 level for the first time since August 7.

Soybean oil futures gained about two percent (December contract +65 basis points per pound). The rally left the benchmark December…