Wednesday: China soy futures up, ignore credit woes on government support

 

 

Soy futures rose on the Dalian Commodity Exchange Wednesday, shaking off nervousness over credit tightening that rattled the commodities complex, as the market looked to supportive government agricultural policies and stronger global soy prices.

 

The benchmark September soy contract settled RMB16 or 0.4% higher at RMB3,920 a metric tonne.

 

"Soy are in a pretty stable situation even though there's supply-driven downward pressure on prices," said Tu Xuan, analyst with Shanghai JC Intelligence Co.

 

"Overall, the market's still confident that government support will be good for prices," she said.

 

Corn and palm oil futures fell along with commodities on other bourses as word spread that Beijing was taking systematic steps to quietly tighten credit conditions.

 

"These fears are affecting all commodity futures," said Wang Cheng, analyst with Nanhua Futures. "It's not clear if any trading houses are having difficulties getting letters of credit yet, but they'll definitely be facing more difficulties getting loans. But to what degree, right now, it's hard to tell."

 

These worries are compounded by the prospect of record South American soy harvests amid improving weather, which would depress prices further.

 

But the central government has repeatedly emphasized that protecting farm product prices and helping farmers are top priorities this year, including extensions of stockpiling policies.

 

Gains in soy futures on CBOT Tuesday due to speculative buying following a period of recent declines also buoyed sentiment that recent losses were overdone.

 

Trading volume on Dalian for all soy contracts rose to 625,824 lots from 478,104 lots Tuesday.

 

Open interest rose 17,596 lots to 363,584 lots.

 

Soyoil and soymeal futures settled flat.

 

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

Soy         Sep 2010      3,920        Up   16     625,824

Corn       Sep 2010      1,860        Dn    3      80,932

Soymeal  Sep 2010      2,854           Unch     499,764

Palm Oil  Sep 2010      6,740        Dn   34     667,218

Soyoil     Sep 2010      7,378           Unch     935,116