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Soy Bean Oil Overview – November 4, 2015

Soy Bean Oil Overview – November 4, 2015 |

soy bean pricing

The average futures price for 2015 is about .3075 and we are currently trading around .2850.

The low end of many analysts’ expectations for futures going forward is around .2500 and some or several of the following would have to occur to get us down to that level.

  • The S. America soybean crop will need to come in at the current record expectation of 100 million metric tons (MT)
    • The largest growing areas have received timely rains and planting has been going well
  • Crude oil would need to continue to decline and stay near or below $40/barrel
  • Demand for soybean meal would need to continue to remain strong which is driving oil production
    • Demand for the first half of 2016 looks strong; slowing the second half of the year
  • The effect of El Nino on Palm production will need to be small
  • China’s economy would need to continue to lag and a strong US dollar would need to continue through 2016
  • The soybean yield and the oil content of the US harvest continue to be better than expected
    • Currently the oil yield this year is a few tenths of a pound better than expected. This means as much as 200 MM lbs of additional oil will be made.

 

The high end of many analysts expectations for futures is around .3400. In order for the market to trade to this level some or all of the following would need to occur.

 

  • The dollar credit is approved by the US for producers of bio-diesel.
  • India’s demand for Veg. oil increases due to poor crop production and increased needs.
  • The production of palm oil will slow due to the haze covering much of the growing area.

 

Most likely a combination of the bullish/bearish factors listed above will occur and other unknowns such as:

  • The result of the presidential election in Argentina which will dictate new export policies and taxes
  • An occurrence of some sort of middle-east conflict which would drive crude oil prices higher during the year
  • The weather conditions for the S. American crop

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.