Monday: China soy futures settle down on strong dollar, falling markets
Soy futures traded on the Dalian Commodity Exchange settled lower Monday, plagued by the strong dollar and widespread losses in financial markets.
The benchmark September 2010 soy contract settled RMB73, or 1.9%, lower at RMB3,795 a metric tonne.
The contract opened lower and remained in negative territory for the entire session.
Chicago Board of Trade soy futures prices tumbled to their lowest levels in nearly four months Friday, with benchmark March soy closing down 17 3/4 cents, or 1.9%, at US$9.14 per bushel.
Analysts expect the U.S. contract to test US$9/bushel support soon.
Declines in metal futures and weakness in Chinese equity markets Monday also helped to drag agricultural product futures lower.
"The soy market now faces risks from tightening monetary credit and a stronger dollar, as well as its own weak (supply-demand) fundamentals,...and commodities' tendency to weakness is unlikely to be reversed in the near term amid a negative financial environment," Galaxy Futures said in a note.
Most soy processors in major producing areas of the northeast have suspended production due to low profit margins, and cash trading is stagnant as market participants don't expect prices to rise ahead of the Lunar New Year holiday in mid-February.
Trading volume of all soy contracts rose to 419,504 lots from 264,038 lots Friday.
Open interest rose 20,288 lots to 352,530 lots Monday.
Corn futures, soyoil futures, palm oil futures and soymeal futures all settled lower.
Monday'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 3,795 Dn 73 419,504
Corn Sep 2010 1,847 Dn 3 76,880
Soymeal Sep 2010 2,737 Dn 66 1,013,088
Palm Oil Sep 2010 6,600 Dn 114 581,250
Soyoil Sep 2010 7,222 Dn 106 665,362
