Monday: China soy futures rise; more upside possible on weather woes

 

 

Soy futures rose Monday on the Dalian Commodity Exchange, supported by weather-related concerns and macroeconomic signals from the government.

 

The benchmark September soy contract settled 1.1% higher at RMB4,069 a metric tonne.

 

Traders are wary that a lack of external support could lead to a technical correction.

 

"External markets don't have much good news, so we're watching for signs that would point to a correction," said Gao Yanrong, research manager for Dalu Futures.

 

However, the heavy snowfalls that have blanketed much of northern and northeastern China, which are major agricultural production areas, are supporting prices in the short term by creating transportation problems, Gao said.

 

"The government's recent indications have also been supportive of prices," he said, pointing to high-level statements from Beijing last week that indicate the country's lending spigot will stay open.

 

Buoyed by Chinese demand, Chicago Board of Trade soy futures made strong gains Thursday, trimmed only by year-end profit-taking at the close.

 

Traders said China continues to be a big buyer of U.S. soy, as drought has cut South American output.

 

Trading volume on Dalian for all soy contracts rose to 328,320 lots from 239,966 lots Thursday.

 

Open interest rose 6,792 lots to 346,100 lots.

 

Corn, soyoil, palm oil and soymeal futures also rose Monday.

 

Monday's settlement prices in yuan a metric tonne for benchmark contracts and volume for all contracts in lots (One lot is equivalent to 10 tonnes):

 

              Contract    Settlement Price  Change      Volume

Soy         Sep 2010      4,069        Up    43      328,320

Corn       Sep 2010      1,890        Up    20      230,076

Soymeal  Sep 2010      3,038        Up    29    1,174,896

Palm Oil  Sep 2010      7,310        Up   124     649,846

Soyoil     Sep 2010      8,046        Up   128     948,980