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Chicago soybean oil futures experienced their sharpest decline in a month on Monday, July 27, as a halt in US military strikes against Iran alleviated fears of further regional escalation. This de-escalation triggered a significant drop in crude oil prices, which in turn pulled down broader grain and oilseed markets.
The US had unexpectedly ceased its nearly two-week campaign of daily strikes over the weekend without providing an official explanation. Following this development, crude oil prices plummeted by more than 7% in the initial minutes of the trading session, briefly falling below the US$90 per barrel mark.
Vegetable oils, including soybean oil, frequently mirror crude oil price movements due to their role in biofuel production. The decline marks a reversal from much of July, when grain and oilseed futures had seen gains. Those earlier rallies were fueled by the Iran conflict's impact on energy prices, alongside concerns over global crop supplies stemming from heatwaves across Europe and intensifying hostilities between Russia and Ukraine.
Specifically, the most-active Chicago soybean oil contract fell by as much as 2.1%, marking its steepest intraday decrease since June 30. Other key commodities in the sector, such as corn, soybeans, and canola, also registered declines.
Source: The Edge Malaysia