January 23, 2009

Soybean futures fell slightly on the Dalian Commodity Exchange Friday on thin trade, tracking counterparts' decline on the Chicago Board of Trade as the market turned again to concerns over the shaky global macroeconomic outlook.

 

The benchmark September 2009 soybean contract lost 0.1% to settle at RMB3,387 a metric tonne.

 

"It's not just soybean that's settling lower, it's the entire market," said Tu Xuan, an analyst with Shanghai JCI Co. "It's thinking about financial market instability, even though domestically, the soybean market actually appears fairly stable."

 

Demand for soy products traditionally weaken in the run-up to the Lunar New Year, as buying winds down, which leaves prices drifting lower, Tu said.

 

Soybean futures on the Chicago Board of Trade settled lower Thursday, giving back gains from Wednesday.

 

Plentiful food supply in China also pressured some prices, she said.

 

Soybean imports reached a record 3.3 million tonnes in December, up 13% on year.

 

Though corn data showed imports and exports falling in December, the overall level of exports fell steeply in 2008 driven by strong domestic demand.

 

"In our view, (this) will eventually result in China becoming a net importer of corn," Barclays Capital said in a note Thursday.

 

Corn futures gained 1% Friday on the Dalian bourse.

 

The government could step in again to widen its soybean stockpile program in a fresh bid to support prices, once its current 4.5-million-tonne buying program ends around April, Tu said.

 

Drought conditions in Argentina and a bitterly cold U.S. Midwestern winter continued to weigh on food futures.

 

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

 

The benchmark soymeal futures contract posted a small gain Friday while benchmark palm oil and soyoil futures shed 0.6% each, tracking CBOT.

 

Cash domestic soybean prices in Heilongjiang, a major producing province, were largely flat from last week, at RMB3,360-3,440/tonne, said Wang Shaoguang of Galaxy Futures.

   

Friday'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        3,387         Dn    4       213,566

Corn             May 2009        1,566         Up   17       128,212

Soymeal       May 2009         2,671         Up    6       262,380

Palm Oil        May 2009         5,182         Dn   32        40,326

Soyoil           May 2009         6,165         Dn   40        91,874