January 7, 2009

China's soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday with the rise on the Chicago Board of Trade, but profit-taking limited the gains during the session.

 

The new benchmark September 2009 soybean contract settled RMB32 higher at RMB3,347 a metric tonne, or up 1.0%.

 

The May contract was up RMB35, or 1.0%, at RMB3,486/tonne.

 

The recent continued rise on the CBOT helped push domestic soybean and soy products higher.

 

"The first half of January is usually an opportunity for index funds to enter the market and once they buy, they are likely to hold the (positions) for a long term," said China International Futures Analyst Shen Enxian.

 

He said there was a greater risk of inflation this year as global central banks have been cutting interest rates aggressively to cope with the ongoing financial crisis, adding funds are more willing to invest in commodities to combat inflation risks.

 

However, the contracts shed some of the earlier gains during the session as traders preferred to take profits amid expectations of declines after the recent rebound.

 

Analysts said many traders were in and out within the same trading session, since the rebound wasn't a turnaround.

 

The open interest in all soybean contracts fell 19,150 lots to 422,278 lots Wednesday.

 

Trading volume declined to 1,367,458 lots from 1,493,030 lots Tuesday.

 

Corn futures settled lower, but soybean meal, soybean oil and palm oil futures all settled higher.

 

However, as the CBOT has been overbought recently, and it isn't a bull market amid the financial crisis, there could be a fall at any time in the near future, said Xiao Jun, an analyst at commodities consultancy firm Shanghai JCI.

 

The local state reserve houses have been releasing soy oil into the market ahead of the Chinese New Year, which falls Jan. 25 this year, to meet demand.

 

Meanwhile, the government has also been importing soy oil for state reserves.

 

But whether the consumption demand will sustain after the holiday remains uncertain, Xiao said.

 

Wednesday'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

Soybean        Sep 2009        3,347        Up   32    1,367,458

Corn             May 2009        1,543        Dn    5       302,280

Soymeal       May 2009         2,649        Up   62      761,926

Palm Oil        May 2009        5,546        Up  190      149,560

Soyoil           May 2009        6,608        Up  192      683,406