January 19, 2007

 

Friday: China soybean futures down; support from pre-holiday demand

 

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Friday following an overnight decline on the Chicago Board of Trade, but any further fall is likely to be limited by support from domestic pre-holiday demand, said traders.

 

The most active September 2007 contract lost RMB58 to settle at RMB3,066 a metric tonne.

 

Total trading volume fell to 107,780 lots versus 128,800 lots Thursday. One lot is equivalent to 10 tonnes.

 

Soybean and soyoil futures on CBOT ended lower as crude oil futures on the New York Mercantile Exchange slumped to a fresh 20-month low Thursday, falling briefly below $50 a barrel after the Energy Department said U.S. stockpiles rose by the most in more than four years.

 

Soyoil can be used to produce biodiesel, a processed fuel that can be used as a replacement for petroleum-based diesel fuel.

 

China's soyoil is made mainly by crushing imported soybeans.

 

Soymeal and soyoil futures settled lower as a result.

 

The most active September 2007 soymeal contract fell RMB47 to settle at RMB2,577/tonne.

 

The benchmark May 2007 soyoil contract lost RMB93 to RMB6,608/tonne.

 

But the fall in soy futures will be limited, as Spring Festival demand will support prices in the cash market, said Liu Xinghua, a trader at Great Wall Futures Co. in Shanghai.

 

The Chinese Spring Festival falls on Feb. 18 this year.

 

Corn contracts also settled mostly lower on reduced demand as exporters have completed full-year purchases from farmers.

 

The benchmark September 2007 contract fell RMB27 to settle at RMB1,731/tonne.

 

Trading volume for all corn contracts totaled 922,542 lots compared with 932,064 lots Thursday.