Mumbai, 27 Jul (Commoditiescontrol): CBOT soy oil prices experienced a sharp drop due to significant fund selling, influenced by a steep decline in soybean prices. This decline was triggered by reports of rain in the Midwest, easing previous concerns about hot, dry weather forecasted for early August—a critical period for soybean crop development.
Additionally, negative sentiment was fueled by a federal appeals court directing the EPA to reconsider its 2022 decision denying temporary waivers for small oil refineries from the biofuels blending mandate. This court decision marks a win for the refining industry, highlighting ongoing tensions between refiners, who argue the Renewable Fuel Standard (RFS) imposes excessive costs, and biofuel producers, who claim the waivers undermine the program's goals.
According to trade sources, funds were significant sellers in the overall soy complex, selling 10,000 contracts of soy oil, 18,500 contracts of soybeans, and 2,500 contracts of soy meal.
ICE canola futures tumbled, impacted by falling soy oil prices and diminishing concerns about hot weather affecting Canada's crop. Traders noted that contract lows in U.S. soy oil futures exerted spillover pressure on canola, which had hit a seven-week high earlier in the week. Previous gains in canola were seen as overdone, driven by earlier strength in soy oil, short covering, and fears of high temperatures on the Canadian prairies.
Malaysian palm oil futures rebounded, ending a three-session decline due to robust export data and a rise in other oils. The benchmark October contract on the Bursa Malaysia Derivatives Exchange rose 23 ringgit, or 0.59%, to 3,941 ringgit per metric ton, despite recording a 0.5% weekly decline.
Euronext rapeseed futures resumed their decline after showing signs of stabilization in the previous session. The most active November contract fell by 13.25 euros per metric ton, settling at 492 euros per metric ton.
According to the latest CFTC Commitment of Traders data for the week ending July 23, managed short positions surged due to renewed short selling. Net short positions increased by 12,982 contracts, reaching a total of 29,620 contracts.
With improved soybean weather in the U.S. and a federal appeals court ordering the EPA to reconsider its 2022 denial of temporary waivers for small oil refineries from the biofuels blending mandate, renewed short selling pressure from managed money suggests further decline in soy oil prices in the coming days.
(By Commoditiescontrol Bureau; +91-9820130172)
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