Tuesday: China soy futures retreat on renewed fears in financial markets

 

 

The soy complex traded on Dalian's Commodity Exchange retreated Tuesday, tracking losses on Chicago's electronic bourse, weaker European equities and renewed fears of instability in financial markets.

 

The benchmark September 2009 soybean contract lost 1% to settle at RMB3,427 a metric tonne.

 

But an analyst said grain prices were moving into a stable range, rather than seeing a rout on further erosion of demand.

 

"They're following losses on the Chicago Board of Trade's soybean futures, and there's more worrying on whether the Royal Bank of Scotland is going to be the next casualty in the financial market," said Xu Wenjie of Tianma Futures. "But generally, they have not breached support levels."

 

Soybean imports remained strong, as Chinese prices still outpaced cheaper foreign soy, buoyed by the government's stockpiling of the commodity at RMB3,700/tonne.

 

Weather concerns throughout the world's major producing regions continued to dog grain news, with bitter cold in the U.S. Midwest, very dry conditions in the southern plains in need of rain and a warmer-than-usual temperature pattern that could compound dryness.

 

Primary producing regions in Argentina also remain dry, prompting more weather-related harvest fears, CBA Commodities reported Tuesday.

 

The U.S. is the world's reserve for soybean supplies until South American production comes online in the spring.

 

Corn, soymeal and vegetable oil futures settled lower on Dalian Tuesday.

 

Soymeal and vegetable oil prices came off earlier rallies as demand from the Chinese New Year season wanes, ending what is traditionally a boon for meal prices, Xu said.

 

Cash domestic soybean prices in Heilongjiang, a major producing province, were largely unchanged from last week, at RMB3,460-3,500/tonne, Xu said.  

 

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

 

Contract      Settlement     Price         Change    Volume

Soybean      Sep 2009      3,427        Dn   33     479,772

Corn            May 2009      1,550        Dn    8    183,372

Soymeal       May 2009     2,659        Dn   52    598,140

Palm Oil       May 2009      5,196        Dn   64     87,154

Soyoil          May 2009      6,184        Dn   70    234,804