Soybean oil futures succumb to late selling pressure

Reports of renewable diesel producer selling its position into the market affect contracts

US soybean oil futures in Chicago ended mixed across the curve on Friday, July 28. the August and September contracts relinquished early gains and ultimately bowed to pressure from reports that a renewable diesel producer was selling a large portion of its soybean oil position back into the market due to operational issues and/or poor margins.

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In addition, revised forecasts calling for short-lived heat in the Midwest corn belt also weighed on the front end of the market. More favorable growing conditions due to the prospects of cooler temperatures and increased chances for precipitation next week come at a time when soybean crops in the region move toward their peak pod-setting phase.

Nearby delivery August soybean oil futures settled at 67.60 cents per pound on Friday, down 101 basis points per pound, or 1.47 percent. The September contract was down 18 basis points per pound at the closing bell. December soy oil futures finished the session at 62.40 cents per pound, up 33 basis points per pound.

Despite the afternoon sell-off, soybean oil contracts farther out along the forward curve ended with slight gains but still well below session highs, underpinned by stronger crude oil prices and worries of tighter global supply. Tensions were heightened in the Black Sea region this week following a volley of air strikes between Russia and Ukraine. Russia pulled out of the Black Sea Grain Initiative early last week.

In Malaysia, palm oil futures ended the session and the week lower, amid ongoing strength in the ringgit. Still, worries that supply from the Black Sea could be choked off kept losses contained. The most actively traded palm oil futures contract (October) closed down 20 ringgit per tonne, or 0.5 percent, on Friday, just above 4,000 ringgit per tonne at 4,006 ringgit per tonne. On the week, the contract was down 0.72 percent in value.

Miller’s data suggested that palm oil production could be marginally higher for the full month of July.

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