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February 2nd, 2018

CBOT Factors: After last week’s bounce higher, bean oil futures ran out of steam this week, finishing 28 points lower vs last Friday’s close. Concerns over South American weather seem to have abated a bit, so the short-covering seen across the soy complex over the last few weeks seems to be over for now. While still short overall, these positions no longer appear to be burdensome, with the fund short  for soybeans estimated to be around 20,000 contracts and soy oil around 16,000 contracts.

• Soy Factors: South American weather and crop forecasts continue to dominate the headlines this week as dryness in
Argentina plays against forecasts for increased soy production in Brazil, with the latter seeming to hold sway for now.
Some private forecasters are calling for Argentine bean production below 50 mln mts and Brazilian production at 115
mln mts or higher. When combined however, these estimates represent little change from previous guesses.

• Canola Factors: Canola markets have been generally quiet this week, with seed futures mostly following soy and oil
premiums following bean oil. Strength in the Canadian dollar vs US has supported offers for RBD into the US.

• Palm Factors: In a holiday-shortened week, palm futures finished slightly lower, as traders accounted for higher-thanexpected
stocks and lackluster export demand. US dollar denominated prices, however, were unchanged from last
week, as the strengthening Malaysian Ringgit made palm prices more expensive in foreign currency terms.


January 26, 2018

CBOT Factors: A complete turnaround in soybean oil futures this week as the market woke up and surged higher nearly 70 points since last Friday’s close. The main driver for the turnaround appears to be technically driven as market was oversold and due for correction.

Fundamentally the market doesn’t have a lot to stimulate it much more than South American weather talk and the market is still overall a structural short.

• Soy Factors: As mentioned, from fundamental standpoint South American weather has taken center stage as their crop will be entering the critical bloom stage very soon in key areas like Mato Grosso, Brazil. Temps are normal and not extreme, the key concern being more around precipitation. Overall chances for rain could best be described as spotty and more localized as opposed to widespread. All eyes in the market are fixated on this because a serious drought impact to production could send meal export interest to the U.S., keeping crush at a solid pace, and ultimately producing more oil.

• Canola Factors: Winnipeg (ICE) seed values have leveled off, a welcome sight to both crushers as margin has expanded given the latest rally in products. Unfortunately, that hasn’t translated into more favorable oil values as offshore oil business has continued to be brisk, even out into new crop 2018. Anecdotally, crushers have a lot more offshore coverage through 2018 than last year, however, RBD buyers for the most part are wide open, hoping for a break in values. The market should present an opportunity at some point, especially when crushers realize they are overall unsold to the food market, but buyers just need to make sure they’re not the last guy at the trough.

• Palm Factors: Despite some disappointment in Malaysian Jan 1-20 palm production (down as much as 20.1%), the
market rallied on the demand front as China made a splash in the Feb/March buying slot. The market does expect an 8-10% drop off in production by end of the month, purely based on general seasonality in the market. India and Malaysia continue to duke it out on trade tariffs, as India is rumored to raise their import tariffs to 5% on all imported oils, while Malaysia’s recent abatement on export tariffs is expected to help pick up exports activity to finish the month of January.

This bulletin is based on sources which we believe to be reliable; however, we do not guarantee the accuracy of the information presented. Any opinions or recommendations expressed are based upon information available to us and upon our general experience and judgment of the commodities markets. This report is not a recommendation to buy or sell a commodity.

Correspondence: Oil Trading – 40 Pointe Drive, Brea, CA 92821 Phone: (800) 421 6258