Weak vegetable oil markets, technical selling push soyoil futures to 15-month low

23 Mar 2023 | Eduardo Tinti

Soyoil CME futures fell off a cliff Thursday to a 15-month low with downward pressures from rival vegetable oil markets, technical selling and some oversupply pressuring domestic prices lower in the US.

Front-month May CME soyoil contracts were down over 4.5% on the day by the time of publication, the largest daily fall since the US Environment Protection Agency (EPA) published below-expected outlines for US biofuels mandates in December 2022.

This has been the third consecutive downfall in soyoil futures, which brought the front-month contract on a rolling basis to the lowest level since December 2021.

Plunging prices of rival vegetable oils - including CPO, rapeseed oil and sunoil – pressured soyoil lower as did increased competition from imported used cooking oil and rapeseed oil that benefit from larger subsidies, Sunvin Group’s head of research Anilkumar Bagani told Agricensus.

“All this combined with a bearish heavy head and shoulder neckline break in the weekly chart resulted in triggering the stop losses for the existing long positions,” Bagani added.

Technical selling has been a feature in the market since the recent soyoil selloff started on Tuesday.

“[Technical selling and the exiting of long positions] is what initially triggered the selloff a few business days ago.  Charts are extremely bearish,” Futures International Terry Reilly said.

Migration of funds from agricultural commodities markets into bonds was also mentioned.

From the fundamentals side, some oversupply in the US domestic market, with heavy crushers’ selling also contributed to pull soyoil futures lower Thursday, Reilly said.