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Soy oil prices remain low as domestic supply rises

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.

For the next few months, the U.S. will be the dominant global player in the soy products trade. Shipments to China for October and November totaled 243 million pounds, more than China’s total for all of 2011-2012.

And domestic soy oil supplies are rising despite the surge in exports. In the December Oil Crops report, the USDA increased its forecast of the 2012-2013 soy oil output by 2.6 percent due to higher crush and yield rates, and it lowered the 2012-2013 soy oil forecast from $0.53 to $0.51. Soy oil futures, which bottomed at $0.47 in November, closed at $0.49 on Friday.

November price lows could be tested again in spring 2013 when large South American supplies begin hitting the market. But the outlook for declining soybean oil stocks in 2013 and the inclusion of the $1 per gallon biodiesel tax credit in the "fiscal cliff" bill are both bullish for soy oil prices beyond spring.

Contact John T. Barone at [email protected].

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