Grain Spreads: A Quick Look at Bean Oil

Sean LuskGeneral Commentary

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Commentary

Bean Oil continues to surge. We have seen good demand return to this market that was sorely needed. There appears to be shortages in Asia is the simplest explanation in my opinion for the current rally up to today. Some possible bullish tidbits include, India’s palm oil imports surging 59% in October to a three-month high compared to the previous month, as refiners boosted purchases to replenish stocks depleted by lower-than-usual imports in recent months and strong festive demand. Malaysia’s palm oil inventories are forecasted to fall in October, marking their first decline in three months, due to lower output and higher exports, a Reuters survey showed. Shortages in Aisa coupled with a rebound in crude oil futures is aiding the rally. As always trade the charts. I like getting long this market longer term as many potential shortages of palm/veg oil in Asia may take time to replenish. Trade Idea below.

Trade Ideas

Futures-N/A

Options-Sell the August 65.00/55.00 put spread for 900 points OB on a GTC.

Risk Reward

Futures-N/A

Options-Maximum risk is 6K here. However, one is collecting 5400 upon entry minus trade costs and fees. So, the maximum risk is $600 plus trade costs and fees. 

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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