Soybean Oil Rally Continues but Fund Spreading Limits Gains

Vegetable oil prices rallied on the last full trading day of the year, but fund spreading limited gains in nearby soybean oil contracts. Palm oil prices rose to narrow the spread to soybean oil, but strength in the ringgit limited the gains. A report released after the Malaysian market close, indicating the U.S. would ban palm oil imports from a second Malaysian plantation, could have a minimal bearish impact on Thursday’s palm oil prices. However, optimism about rising export demand and increasing prices on the Dalian exchange will likely more than offset any selling related to the U.S. ban.

Nearby soybean oil prices gained less than 1/4 percent (March contract +11 basis points per pound). Buying across the soybean complex supported prices. However, fund liquidation of bull spreads drove deferred contracts…