January 11, 2006

 

Wednesday: China soybean futures settle lower on CBOT; corn down

 

 

Soybean futures on China's Dalian Commodity Exchange settled lower Wednesday following overnight losses in soybean futures on the Chicago Board of Trade.

 

The benchmark May 2006 soybean contract settled RMB12 lower at RMB2,712 a metric tonne after trading between RMB2,701/tonne and RMB2,722/tonne.

 

The total trading volume fell to 238,810 lots from 275,436 lots Tuesday. One lot is equivalent to 10 tonnes.

 

Prices were dragged down by losses in CBOT soybean futures, which fell on diminished index fund buying and favorable South American weather outlooks.

 

The lack of fresh supportive news also pulled soybean futures on the Dalian exchange lower, said Yu Junli, an analyst with Green Futures Co.

 

Prices may fall further, as demand for feed is also expected to drop, as more poultry will be slaughtered with the approach of the Lunar New Year, Yu said.

 

"Shorts will likely be active players soon, as the market isn't seeing much positive news both home and abroad," he said.

 

Soymeal futures settled lower, with the benchmark May contract at RMB2,365/tonne, down RMB10 after trading between RMB2,350/tonne and RMB2,380/tonne.

 

The total trading volume of soymeal futures rose slightly to 591,070 lots from 564,566 lots Tuesday.

 

"The benchmark's support will likely be at RMB2,300/tonne, but may be even lower without supportive fundamental news," Yu said.

 

Dalian's No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mostly lower.

 

The most heavily traded September No. 2 soybean contract settled RMB4 lower at RMB2,708/tonne, after trading between RMB2,692/tonne and RMB2,724/tonne.

 

"Fundamentals aren't supporting any price increase, but if we compare grains futures prices with oil and metals, long positions are still well-grounded, especially for the long run," said Tang Yi, with Capital Futures Co.

 

Corn futures traded on the exchange settled slightly lower.

 

The most widely held September contract settled RMB1 lower at RMB1,384/tonne, after trading between RMB1,380/tonne and RMB1,390/tonne.

 

Although two more Chinese people died from bird flu recently, analysts said the market won't be affected much, unless mass culling of poultry takes place. Corn is widely used as feedmeal in China.