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Soybean Oil Poised for ‘Bounce’ on Fibonacci: Technical Analysis

Soybean-oil futures that touched a 33-month low yesterday may be poised to rebound, according to a technical analysis by Jacquie Voeks, a senior commodity market analyst at Stewart-Peterson Group.

The attached chart shows prices fell as low as 43.51 cents a pound on the Chicago Board of Trade, below 45.17 cents, the 38.2 percent Fibonacci retracement of a low in December 2008 and a key indicator of technical support. The contract for December delivery may rise 5.9 percent to 46.44 cents by Dec. 13, Voeks said. An additional bullish signal is that the relative-strength index for soybean oil slid to 23.5, below the level of 30 that indicates a commodity is oversold, she said.

“Being oversold and at that retracement level means we could see a rebound,” Voeks said in a telephone interview from West Bend, Wisconsin. “When you look at that retracement level, this is a really key point on a chart. We could be due for a bounce.”

Soybean-oil futures fell to the lowest since October 2010 yesterday on the CBOT and are down 17 percent from a year earlier, matching declines for competing oilseeds, mostly on signs of record crops in Brazil and the U.S., the world’s largest growers and exporters.

Palm oil, a competing oilseed, has tumbled 26 percent in the past year and yesterday touched the lowest since October 2009 in Kuala Lumpur. Canola, which is crushed to make vegetable oil, touched a 33-month low yesterday on ICE Futures Canada in Winnipeg.

The decline in soybean oil has made the commodity more competitive with palm oil, Oil World said in a report this week. Global exports of soybean oil from April through June were up 7 percent from a year earlier, with demand in Asia up 14 percent, the researcher said.

Increased use of the domestic soy crop to make biodiesel in Argentina, the world’s biggest exporter of soybean oil, may reduce supplies available for shipment to foreign buyers, according to Oil World. Low soybean-oil prices may be a “buying opportunity” if biodiesel output increases, Terry Reilly, a senior commodity analyst at Futures International LLC in Chicago, said by telephone.

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