As drought rampages crops in the South American growing regions, the demand for edible (cooking) oils is seen climbing to record highs. In the end (of harvest season), it is predicted the public will be left with the smallest of global stockpiles not seen since the 70’s.
According to USDA calculations, various cooking & food oil’s usage are expected to rise nearly 4% this current year, decreasing the ratio of reserves to demand not seen since 1977. Palm oil usage alone is expected to rise almost 9%.
“Edible (soybean) oil supplies are going to start tightening quickly. The tightness from the South American harvest and with less acres here in the states for soybeans this season will lead to a supply problem in the near future,” said Chris Hildebrand, vice-president of trading for HighGround Trading Group in Chicago, regarding the current soybean oil futures situation. Hildebrand added, “We are not even close to seeing a peak in (soybean oil futures) prices, so buy dips and look to hold the oils over the near term.”
The trend for soybean oil futures, and the entire soy-complex has been up since early this year – well before the seasonal trend. We’ve been riding this trend the whole time, and we just resumed trading with the trend in soybean oil futures and soybean futures today.