February 3, 2009
Tuesday: China soy futures rise on tighter supply, speculative buys
Soybean futures gained ground on the Dalian Commodity Exchange Tuesday, as agricultural commodities were lifted across the board by speculative buying, slightly firmer crude oil and tightening supplies.
The benchmark September 2009 soybean contract settled 1.5% higher at RMB3,425 a metric tonne.
Soybean and soymeal futures rose as expectations of tighter supply fueled speculative buying, said Li Honglei of Nanhua Futures.
Soybean and soymeal futures were in backwardation, a market condition where nearby contracts are more expensive than ones requiring delivery in later months.
Backwardation typically suggests consumers are willing to pay more to have the product available immediately, indicating a near-term tightness in supply.
In recent interviews with farmers, Li said he learned that many farmers were sitting on harvests, apparently willing to wait out a recent spell of flat spot prices.
After last year's bumper harvest, traders and farmers also expected to see a smaller crop output this year, Li said.
"Don't expect a big harvest this year," he said.
However, Li said the outlook for soybean prices remains bearish, as state reserve purchases wind up in April and more stock begins to flow into the market.
Corn, soymeal, palm oil and soyoil futures also posted gains Tuesday.
"The market's being moved by other products, to some extent," Li said. "Soyoil is linked to oil gains."
Cash domestic soybean prices in Heilongjiang, a major producing province, rose slightly from Monday to RMB3,460-RMB3,480/tonne, said Li.
Tuesday'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 3,425 Up 49 421,176
Corn May 2009 1,586 Up 9 154,966
Soymeal May 2009 2,709 Up 5 615,862
Palm Oil May 2009 5,084 Up 44 132,468
Soyoil May 2009 6,090 Up 66 365,806
