Bullish Undercurrents Build in Soybean Oil MarketMicro Soybean Oil FuturesCBOT_MINI:MZL2!mintdotfinanceSoybean oil futures have rebounded nearly 14% in June, following a 5.7% drop in May, supported by tightening global supply, resilient demand, expanding biodiesel use, and steady U.S. production with some planting delays. Severe drought in Brazil and Argentina, who together account for 45% of global soybean exports, has slashed yields by roughly 15%, tightening supply chains and boosting prices. Strong Chinese demand, both for food and hog herd rebuilding, continues to be a major price driver. China imports nearly 18.5 million tons of soybean oil annually and remains the world’s largest consumer. The USDA’s June WASDE report underscored a bullish backdrop: U.S. production is steady at 4.34 billion bushels for 2025–26, but ending stocks are projected to fall to 295 million bushels, down from 350 million in 2024–25, signalling a tighter domestic supply. Adding to the bullish momentum, crude oil prices surged on 13/Jun amid escalating Israel-Iran tensions, indirectly supporting soybean oil due to its role in biodiesel production. Higher crude prices enhance biodiesel’s competitiveness, boosting demand for soybean oil as a feedstock. Soybean oil futures also jumped after the EPA proposed higher-than-expected biofuel blending mandates. The Trump administration’s proposal, seen as a major win for the biofuels industry, is expected to significantly increase domestic soybean crush demand in 2026 and 2027. TECHNICAL SIGNALS POINT TO BULLISH REVERSAL Technical indicators suggest weakening bearish momentum in soybean oil. Since early June, prices have climbed above the 9-day, 21-day, and 50-day moving averages after starting the month below them. Though the 9-day MA is still below the 21-day, the narrowing gap signals strengthening momentum and a possible bullish crossover. The MACD and RSI indicate that selling pressure has subsided, with momentum now tilting bullish. If this strength persists, the uptrend in soybean oil futures could gain further traction. OPTIONS DATA SIGNALS GROWING BULLISH MOMENTUM For the week ending 10/Jun, Managed Money’s net long positioning in soybean oil futures fell by 22.6%, reflecting a 13% drop in longs and a 7.1% dip in shorts. Rising implied volatility alongside prices and a positive skew suggest growing bullish sentiment, as market participants position for potential upside in soybean oil futures. Source: CME CVOL The rise in call OI across near-term contracts suggests growing bullish sentiment for soybean oil prices. Source: CME QuikStrike While selective increase in put OI reflects cautious hedging, pointing to expectations of further upside with some near-term uncertainty. HYPOTHETICAL TRADE SETUP Bullish fundamentals driven by rising Chinese demand, supply disruptions in South America, and a sharp uptick in crude oil, combined with supportive technical indicators and skewed options positioning, suggest further upside potential for soybean oil futures. This paper posits a tactical long on CME Micro Soybean Oil August futures (MZLQ25 expiring on 25th July), targeting an uptrend in prices. Investors can position against this backdrop using the CME Micro Soybean Oil Futures, which are sized at one-tenth (6,000 pounds) of standard contracts (which are 60,000 pounds). This allows for a cost-effective method to express a short-term bearish stance. As of 16th June, the minimum exchange margin on this contract is USD 190 per lot. • Entry: USc 51/Pound • Potential Profit: USc 57/Pound (57– 51= 6) x 6000/100 = USD 360 • Stop-Loss: USc 47.3/Pound (47.3- 51 = -3.7) x 6000/100 = USD 222 • Reward-to-Risk Ratio: 1.62x In collaboration with the CME Group, TradingView has launched The Leap trading competition. New and upcoming traders can hone and refine their trading skills, test their trading strategies, and feel the thrill of futures trading with a vibrant global community through this paper trading competition sponsored by CME Group using virtual money and real time market data. The competition lasts another 14 days. Please join the other 54,500 participants who are actively honing their trading skills using virtual money. Click here to learn more. #TheFuturesLeap #Microfutures MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme. DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER, the link to which is provided in our profile description.