Thursday: China soy futures settle down on credit tightening concerns
Soy futures traded on the Dalian Commodity Exchange settled lower Thursday as concern over government credit tightening triggered profit-taking.
The benchmark September 2010 soy contract settled RMB50 or 1.2% lower at RMB4,090 a metric tonne.
The contract opened higher but experienced a sudden selloff.
Analysts said the selloff initially occurred in sugar futures traded on the Zhengzhou Commodity Exchange and spilled over to agricultural commodities in general, causing soy futures, soyoil futures, palm oil futures and soymeal futures to briefly hit limit-down.
They said concern that the government would tighten credit prompted traders to take accumulated profits from the recent big rise, which wasn't supported by counterparts on the Chicago Board of Trade.
China's central bank said Wednesday it would maintain price stability and manage inflation expectations through credit and money-supply policies.
In a move to prove that, the People's Bank of China unexpectedly raised a key interbank market interest rate Thursday for the first time in nearly five months, signaling a change in its policy focus toward pre-empting inflation risks in the new year.
Meanwhile, Yuan Jianbin, an analyst with Guangfa Futures, said as soy failed to break through technical resistance at RMB4,200/tonne, long position holders preferred to take profits.
The benchmark contract tested as high as RMB4,188/tonne during the early session, after testing RMB4,194/tonne Wednesday.
However, the overall panic selloff in agricultural products soon eased, with soy prices off their session low of RMB3,975/tonne and consolidating around RMB4,040/tonne until the closing bell.
There wasn't much downward room for soy, as the price is nearing strong support at RMB3,960/tonne, the 40-day average, after today's tumble, said Chen Yanjun, an analyst with the Zhengzhou Grain Wholesale Market, adding soy prices are likely to consolidate in the coming days.
Trading volume for all soy contracts declined to 719,034 lots from 872,612 lots Wednesday.
Open interest fell 56,190 lots to 357,986 lots.
Corn futures, soymeal futures, palm oil futures and soyoil futures all settled lower.
Thursday'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 4,090 Dn 50 719,034
Corn Sep 2010 1,903 Dn 2 182,296
Soymeal Sep 2010 3,016 Dn 42 1,770,860
Palm Oil Sep 2010 7,222 Dn 178 987,650
Soyoil Sep 2010 7,970 Dn 126 1,495,898
