Dining out soon?China, one of the largest consumer of soybean oil, has tapered its demand for the edible oil due to COVID-related control measures over the past few months. With new cases falling and lockdown for Shanghai expected to be lifted soon, we see positive demand drivers on the horizon for soybean oil. Restaurants are among the largest consumers of the oil. As consumers resume their normal consumption patterns and dining out becomes the norm again, it’s easy to see the impact on demand.
Looking at the charts, we see a falling wedge pattern since April (where prices make lower highs and lower lows) which generally indicates an upside breakout could be near. On a longer timeframe, we are close to the 6-month uptrend line, where prices have bounced off in the past.
Additionally the $78 resistance level provides us with further confidence that prices are likely to remain supported at the current levels before making a jump higher.
As demand from the world’s largest consumer of soybean oil revives and technical levels remain intact, we expect more upside from here!
Staggered entry at 79.25 and 78.25 with stops below 77.25 and targets at 84 and 87.60.
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
