January 21, 2009

Soybean futures ended slightly lower on China's Dalian Commodity Exchange Wednesday, as nerves about a North American drought rattled the market and the run-up to Chinese New Year weakened domestic demand.

 

The benchmark September 2009 soybean contract lost 0.9% to settle at RMB3,395 a metric tonne.

 

"A lot of the same concerns that took Tuesday's market lower still apply today," said Gao Yanrong, analyst with Dalu Futures. "These couple of days, the (food commodities) complex is weak."

 

Demand related to the Chinese New Year, traditionally a boon for commodities, weakens in the roughly 10 days leading up to the festival, as stocking is completed so purchases wind down, Gao said.

 

Markets including the soy complex were also still focused on the difficulties of the Royal Bank of Scotland.

 

"If RBS goes down, people might find out there are more problems in financial markets, and that is just not good news," Gao said.

 

But January imports are still strong, reflecting the premium of domestic soybean prices over foreign prices.

 

Weather concerns throughout the world's major producing regions continued to dog soy markets, 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.

 

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 were also generally lower on the Dalian Wednesday, except for soyoil, which posted marginal gains on relatively low supply.

                

Cash domestic soybean prices in Heilongjiang, a major producing province, were slightly higher versus last week, at RMB3,500-RMB3,600/tonne, Gao said.

                                           

Wednesday'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          3,395          Dn   32     298,356

Corn              May 2009          1,548          Dn    2        43,328

Soymeal         May 2009          2,632          Dn   27     406,382

Palm Oil          May 2009          5,188          Dn    8       99,214

Soyoil             May 2009          6,196          Up   12     221,260