Soybean Oil Prices Resist Falling Soybean Prices

January 26, 2021

Over the last ten days, US soybean prices have pulled back sharply as there is increasing concern that South American oversupply will pressure US prices. (Figure 1, black line). However, the soybean oil market has remained strong as the world industrial demand for the soybean oil made from the soybean crush is growing. Near term demand in particular is especially strong, so the March-December soybean oil calendar spread has resisted falling in tandem with the underlying soybean prices. (Figure 2, black line). The charts below can be constructed in the Fundamental Analytics platform under Prices > Instruments and Spreads > Soybeans.

Figure 1 – Soybeans March Contract

Figure 2 – Soybean Oil March-December Calendar Spread

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