Malaysian palm oil futures rise, sparking higher soybean oil prices

I am Stephen Davis, senior market strategist at Walsh Trading, Inc., Chicago, Illinois. You can reach me at 312-878-2391.

Malaysian palm oil futures moved up nearly 1 percent today, January 13, continuing gains reached in the prior trading session. The gain marks a five-week high among edible oils on  China's Dalian Commodity Exchange and the Chicago Board of Trade. This helped U.S. soybean oil futures go higher and above the 200-day moving average. Any market above the 200-day moving average is positive, in my opinion. Staying above that mark is even more positive.

Buying interest strengthened in India, the world's largest importer of edible oils. Purchases are expected to rise in January after hitting an eight-month low in December. Consideration of data due this week from key buyer China regarding edible oil purchases is important. Another factor is uncertainty over the pace of the B50 biodiesel mandate by top supplier Malaysia. 

A trade strategy is to buy March 2026 soybean oil at 5090 (today's settlement price was 5120), good till cancelled (GTC). Risk the trade to 4990 stop, GTC. Profit objective is 5330, GTC. You are risking $600 per contract for a profit of $1,440. That's an attractive risk/reward ratio, in my opinion.

To discuss trading strategies, contact me anytime. Have an excellent day and healthy, prosperous new year. 

Stephen Davis
Senior Market Strategist 
Walsh Trading

Direct 312 878 2391 
Toll Free 800 556 9411
sdavis@walshtrading.com  
www.walshtrading.com

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