January 18, 2006

 

Wednesday: China soybean futures settle lower; CBOT,livestock disease

 

 

China's Dalian Commodity Exchange soybean futures settled sharply lower Wednesday on a fall in soybean futures on the Chicago Board of Trade Tuesday and new cases of foot-and-mouth disease in two Chinese provinces, traders said.

 

The benchmark May 2006 soybean contract lost RMB39 a metric tonne to RMB2,644/tonne, after trading between RMB2,626/tonne and RMB2,667/tonne.

 

Trade volume in the Dalian soybean futures market increased to 280,480 lots from 207,840 lots Tuesday. One lot is equivalent to 10 tonnes.

 

Some traders said imported soybeans were quoted around RMB2,400/tonne at Chinese ports, much lower than domestic prices of around RMB2,700/tonne quoted in major consuming areas in eastern China, in light of the fall in CBOT soybeans.

 

As China heavily relies on imported soybeans to meet its domestic demand, and usually regards imported soybean prices as a benchmark, low import costs have added pressure on the domestic spot and futures markets.

 

Meanwhile, concerns about foot-and-mouth disease in the northwestern Ningxia region and eastern Jiangsu province further weighed on soybean prices. The disease could have an impact on soymeal consumption, said a trader at Zhejiang Nanhua Futures Co.

 

Soymeal is a byproduct of soybean processing and is a key ingredient in feedmeal.

 

The outbreak of foot-and-mouth disease among cloven-hoofed livestock in Ningxia and Jiangsu has led local authorities to slaughter hundreds of such animals, sparking speculation that feedmeal consumption might drop.

 

In response, Dalian's soymeal futures settled sharply lower.

 

The benchmark May 2006 contract dropped RMB58/tonne to RMB2,263/tonne, after trading between RMB2,235/tonne and RMB2,294/tonne.

 

The No. 2 soybean contracts, which can be delivered with soybeans harvested from genetic-modified crops, settled sharply lower, following soymeal futures.

 

The mostly heavily traded September 2006 contract fell RMB44/tonne to RMB2,588/tonne, after trading between RMB2,550/tonne and RMB2,611/tonne.

 

Soyoil futures settled evenly mixed, with three heavyweight contracts down amid negative sentiment.

 

The September 2006 soyoil contract, the most heavily traded contract during the session, fell RMB19/tonne to settle at RMB5,036/tonne, after trading between RMB5,008/tonne and RMB5,058/tonne.

 

Meanwhile, corn futures traded on the exchange settled lower across the board as the negative sentiment in soybean futures spilled over, spurring long liquidation in corn.

 

The most actively traded September 2006 contract retraced RMB14/tonne to RMB1,372/tonne, after trading between RMB1,364/tonne and RMB1,379/tonne.