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Yellow Grease Grinds Higher as Momentum Continues to Surge

Posted on May 15, 2017 in Animal Fats & Oils

Yellow Grease Grinds Higher as Momentum Continues to Surge

Yellow grease prices remained stable and continue to grind higher having increased by more than 11% in 2017.  Prices are bumping up against resistance near the Bollinger band high which is 2-standard deviations above the 20-week moving average at 25.  Support is seen near the 20-week moving average at 23.75.  Prices have benefited from strong demand for vegetable oil which has kept prices of animal fats buoyed.  The slow increase in the Bollinger band width reflects rising historical volatility.

The weekly relative strength index (RSI) continued to climb higher this past week which reflects accelerating positive momentum.  The RSI is a momentum oscillator that measures accelerating and decelerating momentum, along with overbought and oversold conditions.  The current reading on the weekly RSI is 77, which is well above the overbought trigger level of 70, which could foreshadow a correction in prices.  Despite this relatively high level, the RSI climbed as high as 91, when yellow grease prices surged in April of 2016, which means that momentum can continue to drive prices higher.

Momentum as reflected by the weekly MACD (moving average convergence divergence) index is positive. The MACD is also a momentum indicator that measures momentum by evaluating the difference between two exponential moving averages.  As this differential accelerates it can generate a crossover signal, which occurred in January of 2017. The index is printing in the black, and the MACD histogram has a positive trajectory which points to higher prices for yellow grease.

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Market is Fairly Flat

Posted on Apr 18, 2017 in Animal Fats & Oils

Three cars of CWG traded at $0.2750 Chicago today and there was a bid for packer material out at $0.2950 Chicago for April shipment. Trading elsewhere was very quiet with many getting caught up after the holiday weekend.

Weekly Review

The market again was fairly flat last week. Yellow grease trading was down by 6/100th of a cent compared to the prior week’s average. Trading into the Gulf was lower by a full penny, which was the main driver of the lower average price. Sources have commented that big biomass diesel in that region have pushed price down.

Poultry fat and distillers corn oil saw the biggest changes, up just over a quarter of a cent and just under a half cent, respectively.

Poultry fat continues to see higher prices related to tight supplies in the market. Corn oil demand has picked up in the all-veg sector and supplies are tighter as a number of ethanol plants are undergoing seasonal maintenance.

Figure 1.

Figure 2.

Please contact Ryan Standard at 563.223.9021 or ryan@thejacobsen.com with any questions, comments or trading.

Today Last Week Last Year WTD
Broiler Slaughter 31,177,000 31,702,000 32,272,000 31,177,000
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