February 8, 2007
Thursday: China soybean futures down on caution ahead of USDA report
Soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Thursday amid a cautious market ahead of the Friday release of the U.S. Department of Agriculture supply and demand report.
The most active September 2007 contract settled RMB8 lower at RMB3,159 a metric tonne.
Total trading volume declined to 171,526 lots from 197,760 lots Wednesday. One lot equals 10 tonnes.
"The market is concerned of any unexpected data from the report," said Zhang Yifan, a trader at China Grains & Oils Group Feed Corp.
The USDA report will include new estimates on U.S. soybean carryover and global soybean production.
Analysts are predicting the USDA will lower its soybean carryover estimate because of strong domestic export sales and a fairly aggressive crushing pace. According to a Dow Jones Newswires survey of 16 analysts, the average carryover estimate for the 2006-07 marketing year is 569 million bushels, down from the USDA's January estimate of 575 million bushels.
Soyoil futures settled lower, with the benchmark May 2007 soyoil contract falling RMB44 at RMB6,552/tonne.
Soymeal futures settled higher, catching up with earlier soybean contract gains. The most active September soymeal contract settled up RMB2 at RMB2,642/tonne.
Corn futures settled lower on poor feed demand.
The market expects feed demand to become stronger in June, instead of the previous March estimate, due to the slow recovery of the livestock feed industry. Corn can be used as animal feed.
The benchmark September corn contract fell RMB5 to RMB1,709/tonne.
Trading volume for corn contracts totaled 288,284 lots, compared with 293,498 lots Wednesday.
Zhang said corn futures may decline further with pressure coming from the sluggish cash market, but immediate support for the September contract is at RMB1,700/tonne.
The warmer weather may make it more difficult to stockpile corn, which is at high levels, he said.
