January 23, 2008

 

Wednesday : China soybean futures up on US rate cut, bargain hunting

 

 

Soybean futures traded on the Dalian Commodity Exchange settled up Wednesday as the U.S. rate cut overnight helped to restore sentiment.

 

Some bargain hunting also appeared after the panic selling Tuesday.

 

The benchmark September 2008 soybean contract settled RMB36 higher at 4,607 a metric ton.

 

Tuesday morning, the Federal Open Market Committee lowered its target rate for federal funds by 75 basis points to 3.5%.

 

"If one market is stabilized, it will help to restore the confidence in other markets," said Fu Jianjun, an analyst at Miracle China Futures.

 

However, many traders are still on sidelines to see how long the stability can last, as the overall trend of a slowing U.S. economic growth won't change.

 

There was active selling in soybeans contracts, meaning a correction may last for one to two months, Fu added.

 

Meanwhile, a weakening dollar is also a support for the commodities market as it effectively makes them cheaper for buyers outside the U.S.

 

Most market participants still see strong fundamentals in soft commodities driven by a bullish Chinese economy, said Chen Wenqing, a senior analyst with China National Cereals Trade Corp.

 

Palm oil futures settled mostly lower due to weak demand in winter season, while soyoil futures settled mostly higher.

 

Soymeal futures and corn futures also settled higher.

 

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

 

         Contract      Settlement Price   Change     Volume

 

Soybean      Sep 2008        4,607         Up  36        1,084,088

Corn           Sep 2008        1,730         Up    7           336,362

Soymeal      Sep 2008        3,259         Up  35           543,592

Palm Oil      May 2008        9,518         Dn 112            31,806

Soyoil         May 2008      10,510         Dn  44           388,542