January 13, 2009

Soybean futures traded on the Dalian Commodity Exchange settled sharply lower Tuesday, as the market was disappointed by the U.S. Department of Agriculture's report overnight.

 

The benchmark September 2009 soybean contract settled RMB123 lower at RMB3,376/tonne, down 3.5%.

 

The USDA data showed higher-than-expected soybean supply and lower usage in contrast to expectations of lower production and ending stock forecasts.

 

"The crude oil price weakness, USD strength and limit-down corn (on CBOT) also weighed on soybeans," said Commonwealth Bank of Australia in its research note issued Tuesday.

 

However, analysts said dry weather in South America and a possibly weaker dollar may still lend some support to commodities.

 

The recent rebound in CBOT soybean prices was partly driven by strong Chinese demand, which analysts said may not last long after the Chinese New Year holiday in late January.

 

China's soybean imports in December rose 13% from a year earlier to 3.3 million tonnes, initial trade data issued Tuesday by the General Administration of Customs showed.

 

That compared with a 1.1% on-year fall in November, as the government's purchase of domestic soybeans helped support local prices, prompting traders to seek much cheaper imports.

 

Trading volume of all soybean contracts declined to 983,474 lots from 1,004,118 lots Monday.

 

Opening interest fell 10,296 lots to 359,466 lots Tuesday.

 

Corn futures, soymeal futures, soyoil futures and palm oil futures all settled sharply lower.

 

Benchmark soymeal, soyoil and palm oil futures all hit 5% limit-down during the session.

 

The DCE will adjust its margin for trading and trading limits of crops traded there for the week-long Chinese New Year holiday, which starts Jan. 25 this year.

 

The minimum margin for the trading of soybean, soymeal, soyoil, corn and palm oil contracts will be raised to 8% of the respective contracts' value from 5%-7% from Jan. 23, the last trading session before the holiday. The changes will be adjusted back to 5%-7% from Feb. 5.

 

The upper and lower trading limits for all contracts traded on the DCE will be expanded to 6% of the previous settlement prices from 4%-5% from Feb. 2, the first trading session after the long holiday, and adjusted back from Feb. 5.

 

The exchange usually makes such changes ahead of long holidays to avoid risks brought by possible volatility on CBOT while the Chinese market is shut.

 

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

 

Contract       Settlement       Price        Change      Volume

Soybean       Sep 2009        3,376        Dn  123     983,474

Corn            May 2009        1,548        Dn   19      233,284

Soymeal      May 2009        2,635        Dn  115      437,220

Palm Oil       May 2009        5,372        Dn  282       10,178

Soyoil          May 2009        6,292        Dn  330       95,980