Soybean values dropped additionally last week but nothing to match the price depreciation seen in soybean oil futures. The precipitous fall of nearby crude oil futures spilled into the rest of the edible oils complex, pushing soybean oil prices closer to $0.25 per pound.

Crude oil took the spotlight last week, with the May-20 contract’s unprecedented drop off the board at an eye-popping -$37 per barrel. That was enough to push soybean oil futures below recent support levels near $0.26 per pound.

With U.S. soybean crush demand seemingly far from losing steam (some issues within the supply chain may prove to be impactful), we will likely see soybean oil stocks build as well. Currently USDA has projected 7.7 billion pounds of soybean oil will be used for biodiesel in 2019/20, but considering the reduced usage of soybean oil for biodiesel as well as for food use so far this year, additional declines are not out of the question, potentially propelling soybean oil ending stocks to near 2.0 billion pounds.

Not only will this be impactful on futures prices, it will also likely maintain a great deal of pressure on soybean oil basis values.

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U.S. monthly crude soybean oil stocks

Source: USDA
Posted by: Information Services
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