January 22, 2008
Tuesday: China soybean futures tumble on US subprime woes
Soybean futures traded on the Dalian Commodity Exchange tumbled Tuesday on global concerns over the U.S. subprime crisis.
The benchmark September 2008 soybean contract settled RMB134 lower at RMB4,571 a metric tonne, down 2.8%.
With annual financial reports of major banks and funds being issued, concern over U.S. subprime issues increased.
The South China Morning Post, citing unnamed sources, reported Monday that Bank of China may report a lower net profit or a loss when it discloses its 2007 results due to substantial writedowns of its U.S. subprime mortgage-backed securities investments.
Analysts said investment funds are trapped in the financial market, as there is no one willing to buy amid falling prices.
"It's more of a systemic risk, and no commodities can avoid it," said Wang Lin, an analyst at COFCO Futures.
But he added that soft commodities could be hit the least due to tight global supply.
Agricultural products have overreacted to the woes, as demand for food is less price-elastic, said Dong Shuangwei, an analyst at Capital Futures.
Palm oil futures and soyoil futures were hit the most among the contracts traded on the DCE, with their benchmark contracts both hitting 4% limit-down during the afternoon session.
Analysts said edible oil contracts have shown a stronger performance compared with other soft commodities in recent trading sessions, and they are now succumbing to a bigger fall on overall panic selling.
Soymeal futures and corn futures also settled lower.
Tuesday's settlement prices in yuan a metric tonne and the volume for all contracts in lots (One lot is equivalent to 10 tonnes):
Contract Settlement Price Change Volume
Soybeans Sep 2008 4,571 Dn 134 1,524,954
Corn Sep 2008 1,723 Dn 33 717,712
Soymeal Sep 2008 3,224 Dn 108 583,172
Palm Oil May 2008 9,630 Dn 344 20,090
Soyoil May 2008 10,554 Dn 312 371,830
