Since reaching a contract high of $1,008/metric ton on the July contract and $769.60/mt on the November contract, futures have slid by $124.80/mt and $62.80/mt, respectively, as of the May 21 close.
You know that something is up in cash trade when the ICE Exchange reports Vancouver cash trade moving from $90/mt over the July to $105/mt over the November as they did on May 19, a move that would indicate a change in price from $1,023/mt to $826.70/mt, or a drop of $196.50/mt. While this should not be viewed as a real-time change in price, old-crop sentiment has changed substantially across the oilseed and vegetable oil markets this month, while balance sheets remain tight.
Pdqinfo.ca reported cash prices across the nine regions of the Prairies reaching highs between May 6 and May 8, while these have since slid from $171.18/mt in southwest Saskatchewan to $202.72/mt in northeast Saskatchewan, as of closing data on May 21. A combination of falling futures and weakening basis, partially linked to Canadian dollar strength during the period in question and spill-over from competing oilseeds, has taken a heavy toll on prices, although at the same time, uncommitted old-crop will be in tight supply.
One interesting chart to take note of is the price trend for rapeseed oil FOB Rotterdam. So far this month, it has moved $156/mt USD higher to $1,617/mt. Of this move, an increase of $150.50/mt USD was show for the week of May 17, while this move was extended on May 24 with a move of $4/mt USD.
This signals ongoing demand in the vegetable oil markets despite high prices shown, which can't be ignored. Also related, the most recent CFTC report shows noncommercial traders increasing their bullish net-long position in soybean oil in the week ending May 18, the first time in four weeks and one of the few places seen across the grains for that week.
Cliff Jamieson can be reached at firstname.lastname@example.org
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