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ZL #F: Soybean Oil Turning Higher Will Make Cooking Expensive

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Soybean Oil is one of the grain & oilseed commodities, along with wheat, soybeans, corn, rice, oats and others. Just behind palm oil, it is the second most used vegetable oil, basically, for frying and baking. Also, soybean oil finds applications medically and, when processed, for printing inks and oil paints. One can trade Soybean Oil futures at Chicago Board of Trade in contracts of 60’000 pounds each under the ticker ZL #F.

Currently, we see commodities like wheat and soybeans turning higher after a long period of depressed prices. Based on the correlation within group of grains & oilseeds, the soybean oil is expected to turn higher as well. In particular, wave structure of ZL #F supports that bullish view. Will the rally in the soybean oil prices make it less affordable for the broad population?

Soybean Oil Weekly Elliott Wave Analysis 11.09.2020

The weekly chart below shows the soybean oil front contract ZL #F. From the all-time lows, the prices have developed a cycle higher in black wave ((w)) of a grand super cycle degree. It has ended in March 2008 at 71.23. From the highs, a correction lower in wave ((x)) has unfolded as an Elliott Wave zigzag pattern. In 12 years, ZL #F has become cheaper by more than 60% reaching 24.61 level. It is the preferred view that an important bottom on April 2020 has been set and the black wave ((x)) has ended. From the lows, the recovery in prices may have started.

For 2020-2030, the expectations are to break out to the new all-time highs. The target for wave ((y)) to end will be 95.88-139.95 area.

Soybean Oil Elliott Wave Weekly

Soybean Oil Daily Elliott Wave Analysis 11.09.2020

The daily chart below shows in more detail the advance from the April 2020 lows. From the bottom at 24.61, black wave ((1)) higher is unfolding as an impulse which is still in progress. Within it, waves (1)-(4) have ended, wave (5) is extending higher and should end soon the entire April cycle higher in wave ((1)). Later on, the pullback in wave ((2)) should find support in 3, 7, 11 swings for an extension higher in wave ((3)).

Investors and traders can be, therefore, looking to buy pullbacks in 3, 7 or 11 swings against 24.61 lows. In a long run, soybean oil should reach 95.88-139.95 area.

Soybean Oil Elliott Wave Daily

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Elliott Wave View: Oil Futures (CL) Looking to End Flat Correction

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Elliott Wave View in Oil Futures (CL) shows that it has ended wave ((4)) pullback at $36.89. This wave ((4)) is part of the cycle starts from April 22 low as a 5 waves impulse. Oil has turned higher in wave ((5)) and should subdivide in 5 waves impulse in lesser degree. Up from wave ((4)) low at $36.89, wave 1 ended at $38.08 and pullback in wave 2 ended at $37.10. Oil resumes higher again in wave 3 towards $41.11, wave 4 ended at $39.57, and wave 5 ended at $41.74.

This 5 waves higher ended wave (1) in higher degree. Pullback in wave (2) is currently in progress as an expanded Flat. Down from wave (1) at $41.74, wave A ended at $39.36, wave B ended at $41.90, and wave C of (2) is expected to end soon before Oil turns higher again. As far as wave ((4)) pivot low at $36.89 low stays intact, expect Oil to extend higher again once wave (2) Flat correction is complete.

Oil (CL) 1 Hour Elliott Wave Chart

Oil (CL) Elliott Wave Chart

Oil (CL) Elliott Wave Video

Elliott Wave View: Correction in Oil Completed

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Elliott Wave View of Oil (CL) suggests the cycle from August 26 high has ended as wave II. The correction unfolded as double three Elliott Wave Structure. Down from August 26 high, wave ((W)) ended at 40.22 low. The bounce in wave ((X)) ended at 41.87 high. Afterwards, the commodity resumed lower and ended wave ((Y)) at 36.21 low. This ended wave II pullback in the higher degree. Since then, the commodity has resumed the rally higher.

Up from wave II low, wave 1 ended at 38.45 high. Wave 2 dip unfolded as zigzag correction and ended at 36.67 low. Currently, wave 3 higher is in progress. The subdivision of wave 3 is unfolding as 5 waves impulse structure. Wave ((i)) ended at 37.82 high and wave ((ii)) dip ended at 36.82 low. Wave ((iii)) higher ended at 40.34 high. Afterwards, pullback in wave ((iv)) ended at 39.51 low. Oil can push for another high before ending wave 3 and followed by a pullback in wave 4 later. As long as 36.21 low stays intact, expect the dips in 3,7 or 11 swings to find support. However, oil still needs to break above August 26 high at 43.78 to confirm that next leg higher in wave III has already started. Otherwise, wave II could still unfold as a double correction before upside resume again.

Oil (CL) 1 Hour Elliott Wave Chart

Oil 9.17.20 Asia

 

Oil (CL) Elliott Wave Video

$USO United States Oil Fund Longer Term Cycles & Elliott Wave

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$USO United States Oil Fund Longer Term Cycles & Elliott Wave

Firstly the USO instrument inception date was 4/10/2006. CL_F Crude Oil put in an all time high at 147.27 in July 2008. USO put in an all time high at 953.36 in July 2008 noted on the monthly chart. The decline from there into the February 2009 lows was in three swings. An a-b-c in red although it was a very steep pullback.

Further, the bounce from the 2009 lows is a complex double three combination with a triangle “y”. This is w-x-y in red to end the blue wave (x). In either a bullish or bearish market this particular structure always makes a high or low in the initial wave “w”. After a wave “x” correction, structures like this will be followed by a contracting or running triangle. In this case the structure ended in June 2014. The decline from those highs were very sharp again. As can be seen, this was in three swings again a-b-c in red to end the blue wave (y). This completed a three swing correction  (w)-(x)-(y) in blue from the July 2008 highs.

The analysis continues below the USO Monthly chart.

 

Secondly CL_F Crude Oil and the USO instrument as previously mentioned made an all time high back in July 2008. Each of the cycles appears to have declined in three big swings into the February 2016 lows. In the case of USO the price was 61.36. The bounce into the October 2018 highs was three swings again. The analysis continues below the USO Weekly chart.

 

In conclusion: The USO mirrors CL_F Crude Oil. The bounce from the February 2016 lows into the October 2018 highs appeared to have been a zig zag. Further this is a second (x)(x). As can be seen the decline from the October 2018 highs to the December 2108 lows was five waves and labeled “a”. There was a bounce that failed in April 2019 labeled “b”. Wave “c” made new lows in April 2020. While pullbacks remain above there expect it turning higher again.

Thanks for looking. Feel free to come visit our website.  Please check out our services Free for 14 days to see if we can be of help. Kind regards & good luck trading. Lewis Jones of the ElliottWave-Forecast.com Team