In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.
Soy-oil futures have dropped from a high of 57 cents in mid-April to just 50 cents on Friday despite the fact that almost all of the soybean news has been bullish. According to Oil World, U.S. soybean ending stocks will drop 17 percent from a year ago as importers switch to U.S. soybeans in the wake of drought-reduced output in South America. But strong global demand for soymeal has allowed soy-oil “share” of the soy complex to drop from 47.25 percent to 37.6 percent. As a result, according to Brian Williams and Anne Frick at Jefferies-Bache, we are in the bearish phase of a soybean oil price cycle that could see its low in 2013 after the South American crops come to market.
Meanwhile, the threat of an El Nino would be detrimental to production of palm oil because it would cause drought in Southeast Asia. That could limit near-term (2012) lows to about the 49-cent level.
Contact John T. Barone at firstname.lastname@example.org.