February 4, 2009
Wednesday: China soy futures rally on commodities gains, bad weather
Soybean futures led a rally across agricultural futures on the Dalian Commodity Exchange Wednesday, buoyed by gains in the wider commodities complex, expectations of production cuts in South American crops and drought reports in north China.
The benchmark September 2009 soybean contract gained 1.2% to settle at RMB3,465 a metric tonne.
"It's a combination of three reasons: all commodities are doing well in China, bad weather in South American could bring production cuts, and even a drought in north China could be good for prices," said Gao Yanrong of Dalu Futures Co.
Scattered showers in Argentina have brought relief to drought-stricken soybeans there, but uncertainty remains about a return to unfavorable weather.
Large parts of north China are under drought alert, as water levels near 50-year lows.
If drought conditions persist, agricultural supply may be squeezed, which would in turn buoy prices.
But some analysts, including Wang Cheng of Nanhua Futures, said it was too early to say if the drought would pan out into severe conditions in the longer term.
Corn, soybean meal, palm oil and soybean oil futures posted gains across the board Wednesday.
"If all the government's policies favor agricultural products, as it promised on Feb. 1, this is a basis for optimism," Gao said.
Cash domestic soybean prices in Heilongjiang, a major producing province, fell slightly from a week ago to RMB3,320-3,460/tonne.
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
Soybean Sep 2009 3,465 Up 40 368,560
Corn May 2009 1,591 Up 5 189,238
Soy Meal May 2009 2,719 Up 10 649,772
Palm Oil May 2009 5,200 Up 116 104,794
Soy Oil May 2009 6,202 Up 112 315,014
