Wednesday: China soy futures lead complex lower on tight-credit talk

 

 

Soy futures fell on the Dalian Commodity Exchange Wednesday, along with sagging markets across asset classes amid talk that Chinese banks have been told to halt new yuan loans.

 

The benchmark September soy contract settled 1% lower at RMB3,881 a metric ton.

 

"Externally, the rumor about bank loans was the biggest factor, but internally, in terms of fundamentals, this is also coming at a time when there are record crop outlooks in South America, so there's intense pressure on prices," said Tianma Futures analyst Xu Wenjie.

 

Local media Wednesday cited unnamed sources as saying that banks had been told to stop new loans, lending weight to recent indications that China was moving to further tighten lending growth.

 

Meanwhile, Bank of China Ltd. has ordered its credit officials to halt any new yuan loans due to excessive lending growth so far in January, and also curb foreign-currency denominated new loans, a person familiar with the matter told Dow Jones Newswires.

 

Soy futures on the Chicago Board of Trade were also in retreat Tuesday due to a lack of fresh supportive news, and continued to slip during Asian trading hours Wednesday.

 

Trading volume on Dalian for all soy contracts rose to 344,834 lots from 171,652 lots Tuesday.

 

Open interest rose 17,026 lots to 355,628 lots.

 

Corn, soyoil, palm oil and soymeal futures also fell Wednesday.

 

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

 

              Contract  Settlement Price  Change      Volume

Soy         Sep 2010      3,881        Dn   40     344,834

Corn       Sep 2010      1,892        Dn    6      58,278

Soymeal  Sep 2010      2,882        Dn   31     836,704

Palm Oil  Sep 2010      6,782        Dn   66     628,074

Soyoil     Sep 2010      7,414        Dn   72     885,038