July soybean oil futures (ZLN25) present a selling opportunity on more price weakness 

See on the daily bar chart for July soybean oil futures that prices had been trending higher and on Wednesday hit a 1.5-year high. However, today’s limit-down price move in bean oil suggests the bulls are finally exhausted and that a major market top is in place. Soybean oil’s recent uptrending rally had been suspect to me for at least a couple weeks. 

Why? Soybean meal futures (ZMN25) were not participating in the rallies in soybeans (ZSN25) and bean oil. In fact, July soybean meal futures have been languishing near the contract low recently —until today’s solid gains. It’s my bias that spreaders are now and will continue to unwind long bean oil/short soybean meal spreads in the near term.

Fundamentally, crude oil prices (CBN25) rallying recently have helped to boost bean oil. However, crude oil prices are now seeing selling pressure due to the International Energy Agency late this week lowering its global crude oil demand growth projections. Also, the prospect of the U.S. and Iran having better relations in the coming months could mean removing sanctions on Iranian oil —adding more supplies to the global oil market. Also, there are concerns the U.S. biofuels renewable diesel target number for next year may be lower than expected.

A price move in July bean oil below chart support at 49.00 cents would become a selling opportunity. The downside price objective would be 43.00 cents, or below. Technical resistance, for which to place a protective buy stop just above, is located at 51.70 cents.

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 

Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.