January 15, 2007

 

Monday: China soybean,corn futures settle sharply up on CBOT rise

 

 

Soybean futures traded on the Dalian Commodity Exchange settled sharply higher Monday on the heels of Friday's strong gains in Chicago Board of Trade soybean futures.

 

The benchmark May 2007 contract settled RMB112 higher, or up 3.96%, at RMB2,940 a metric tonne.

 

Total trading volume reached 67,466 lots versus 59,466 lots Friday.

 

One lot is equivalent to 10 tonnes.

 

"The USDA (U.S. Department of Agriculture) reports were really out of line with expectations, and Friday's gains on CBOT have driven most of the (Dalian Commodity Exchange) contracts, (not only soybeans), to limit-up," said Dong Liang, an analyst at Shanghai Jiuheng Futures Co.

 

Soy futures prices are likely to further gain this week, if corn were to rise more, Dong said.

 

The U.S. Department of Agriculture reported Friday that corn production in 2006 was 10.535 billion bushels, 210 million bushels below its previous estimate and well below the 10.706 billion bushels anticipated by analysts.

 

Dalian's soymeal and soyoil futures settled sharply higher, along with soybean futures.

 

The benchmark May 2007 soymeal contract gained CN92, or up 3.8%, to settle at RMB2,419/tonne, while the benchmark May 2007 soyoil contract settled RMB219 higher at RMB6,791/tonne, or up 3.2%.

 

Analysts said the strong gains on CBOT Friday helped Dalian soy futures stave off losses in the session due to weak charts and fundamentals. Demand for feed has remained sluggish.

 

"If the CBOT sees a correction this week, the local market will probably attract fresh short-selling, given the high prices," said a trader in Beijing.

 

Dalian's corn futures settled sharply higher due to CBOT corn futures, which hit their daily limit-up Friday.

 

The most active September 2007 contract gained RMB66 to settle at RMB1,769/tonne, a record high.

 

Trading volume for all corn contracts fell to 705,456 lots from Friday's 747,570 lots.

 

"Because CBOT corn futures hit their daily upper limits Friday, it's likely to see follow-through buying in electronic trading Tuesday, which can drive local corn futures even higher," said Dong.

 

However, "the surge isn't very likely to bring much price fluctuation to the spot market, as buyers will stay on the sidelines, given the weak demand," said the trader in Beijing.