Crude Oil’s Next Move? Clues from Soybean Oil… Erik Norland, CME

I’m still trying to figure out the dollar/oil causation/correlation, but it’s a pretty good read:

http://www.cmegroup.com/education/featured-reports/crude-oils-next-move-clues-from-soybean-oil.html

Erik’s conclusion is this:

”We remain unsure of the exact reason why soybean oil and other vegetable oils prices tend to lead crude oil prices but we suspect that it results from two factors: 1) the existence of biofuel mandates in over 60 countries around the world (including the U.S. nations in the E.U., Brazil and China), and 2) the modest size of the veg oil market in comparison to the vastness of the crude oil market. The latter is roughly 20x larger and via the biofuel mandates small fluctuations in crude oil supply and demand conditions can have an outsized impact on vegetable oil prices – impacts that may be moving vegetable oil prices in advance of crude oil prices on many occasions.”