Canada Markets

Soybean Oil Closes Higher

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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Soybean oil for May delivery closed higher on April 2 after coming close to testing the contract's March high, while higher for a third session. A triple top has been formed that bears watching and the 20-day moving average has moved above the 50-day while moving towards the 100-day moving average. (DTN ProphetX chart)

Soybean oil futures were all alone across the U.S. crop and crop product futures in Tuesday's session, ending in positive territory. A similar move was seen in global oilseeds and vegetable oils, such as canola, rapeseed and palm oil.

May soybean oil closed 0.36 cent higher at 48.60 cents/lb., closing above the contract's 100-day moving average for the first time in five sessions and the fifth time in 12 sessions. This is a third consecutive higher close for the contract, while the latest two closes have landed closer to the lower end of the range traded.

A couple of technical signals bear watching. The first is a triple top on the daily chart, with a high of 49.80 cents on March 18, 49.76 cents on March 21 and today's high of 49.77 cents. Following the previous two highs, lower lows have followed. A move below the March 28 low of 47.25 cents would be viewed as a bearish signal, especially if accompanied by increasing volume.

At the same time, the 20-day moving average (blue line) moved above the contract's 50-day moving average (red line) on March 22 and has continued to trend higher towards the 100-day moving average. The move above the 50-day moving average is often viewed as a technical signal for entry into the market, although traders may be patient waiting for confirmation with a breach of the recent highs as discussed earlier.

The first study shows the stochastic indicators on the daily chart turning sideways.

The blue histogram bars on the lower chart show the bearish noncommercial net short position falling for a third week to 8,851 contracts net short as of March 26, the smallest net short position seen in 15 weeks or the week ending Dec. 12. Given the magnitude of the weekly change in this position over the past three weeks, which averages 13,319 contracts, this Friday's CFTC report as of April 2 could easily show speculative traders holding a bullish net long position for the first time in four months.

Cliff Jamieson can be reached at

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