- Chicago markets have once again moved higher with soybean oil providing the initial stimulus as funds added fresh longs in the wake of overnight palm oil firmness. The one story we subscribe to at present is the fundamental bullish tropical oil picture based upon tight Malaysian stocks and good export interest. We can add to this the 2016/17 US soybean oil stock level forecast to reduce to its lowest in many years, despite record large crush rates that are straining capacity. The reduction in US soybean oil stocks together with the improved export demand is the bullish input right now. Technical soybean oil chart patterns are in the process of building a bullish “head and shoulders” pattern, which could well add to upside momentum in the short to medium term.
- Regardless of supply position in corn and soybeans we are beginning to see a build up in demand for US supplies and this is contributing to support, which will spill over into non-US markets.
- Soybean oil remains the bullish driver in the near term, but caution should be observed in adding to positions until such time as we see confirmation of growth in US export demand. Price upside is not yet guaranteed!