Thursday: China soy futures down on credit tightening, weather woes

 

 

Soy futures fell on the Dalian Commodity Exchange Thursday, weighed down by ongoing concerns over tightening credit conditions and potential oversupply from likely record harvests in South America.

 

The benchmark September soy contract settled CNY55 or 1.4% lower at CNY3,865 a metric tonne.

 

"The credit issue is the main reason for today's decline, but unlike the situation in the metals market, it isn't the only reason--global oversupply is a problem too," said Gao Yanrong, an analyst with Dalu Futures.

 

Improving weather in South America is threatening to flood the market with all-time high volumes of soy, which has persistently dragged prices down this month.

 

Adding to these fundamental worries, news surfaced last week that Beijing was moving to curtail new bank loans for the remainder of January.

 

While analysts speculate that the government wants to smooth credit flow over the course of the year rather than choke growth, the quiet policy moves have spooked markets across asset classes.

 

Trading volume on Dalian for all soy contracts fell to 412,590 lots from 625,824 lots Wednesday.

 

Open interest fell 17,798 lots to 345,786 lots.

 

Corn, soyoil, soymeal and palm oil futures settled lower.

 

Thursday'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      3,865        Dn   55     412,590

Corn       Sep 2010      1,849        Dn   11     101,054

Soymeal  Sep 2010      2,813        Dn   41     669,940

Palm Oil  Sep 2010      6,684        Dn   56     633,958

Soyoil      Sep 2010      7,320        Dn   58     870,904