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Market Trends | December 7, 2015

Market Trends for December 7, 2015 |
commodity market trends

Since Nov. 16 soybean oil futures have rallied nearly 5 cents per pound, which is over a 15% rally in the price.

soybean market trends

A – Start of the rally 11/16. Opening price .2735

B – Resistance level – After trading closed above this level many traders covered their short positions helping spur prices higher.

C – On Friday 12/4 talk that Senator Grassley was changing the wording on the $1 tax credit to a producers credit instead of a blenders credit helped push the market higher; closing up over 1 cent/lb at $.3233.

Bullish Factors

  • Over the past few weeks the weather in S. America has not been ideal for planting. Brazil and Argentina, the largest soybean producing countries besides the US, have had dry weather conditions. This has delayed planting and raised concern the crop will not be as big as the record forecast of over 100 MM MT.
  • The EPA released the new RFS (Renewable Fuel Standard) increasing the mandatory amount of bio-diesel production in the US for 2015, 2016 and 2017. This increased production of bio-diesel will most likely lead to a decrease in soybean oil stocks below the current USDA estimates.
  • The $1 tax credit that has been given to bio-diesel producers/blenders in the past is now possibly only going to go to producers. If the credit only goes to producers of bio-diesel, imported bio-diesel stock that is blended in the US would not be eligible for the credit; increasing the amount of domestic soybean oil that would go into bio-diesel.
  • Funds have reversed their position in soybean oil going from a net short position to a net long position after soybean oil prices broke through the top of the trading range that had acted as resistance the last 3 months.

Bearish Factors

  • The weather has started to improve in S. America and forecasts call for rain in many of the largest growing areas.
  • Crude petroleum oil has been down sharply and OPEC has stated they will not be lowering production levels any time soon.
  • The El Nino that was expected to cause weather that would reduce palm production has yet to materialize.

Canola-  Stats Canada released their latest estimate of the 2015 crop at 17.2 mil MT which was significantly above the estimates of 15.6 mil MT. This could make canola oil competitive with SBO in 2016.

Corn- Corn oil pricing is up slightly and should remain firm as we go into the winter months as production slows down slightly.

Peanut- Peanut oil prices have rallied slightly as ending stocks this year are over 4 MM lbs less than last year at this time.

Palm- Palm prices have rallied slightly following soybean oil futures and thoughts that production in 2016 will still be negatively impacted by El Nino.  There is also anticipation that there will be additional demand from the Indonesian bio-diesel industry.

Disclaimer: Oasis Foods shares the information above to provide insight on the factors affecting the pricing of our products. It is intended to be used for informational purposes only and should not be interpreted as purchasing advice.