February 16, 2009

Soybean futures traded on China's Dalian Commodity Exchange settled lower Monday, as the contracts met resistance after recent gains.

 

The benchmark September 2009 soybean contract settled down RMB45, or 1.3%, at RMB3,510 a metric tonne.

 

The DCE contract has recently outperformed its counterpart on the Chicago Board of Trade, which fell during most of last week's sessions, due to Chinese government purchases of cash soybeans at the above-market price of RMB3,700/tonne.

 

Futures prices have faced resistance as they have neared RMB3,700 due to a lack of upward momentum and to last year's bumper harvest, said Xu Wenjie, an analyst at Tianma Futures Co.

 

However, he said the downward correction is likely to be limited by support from the government's purchase price.

 

Trading volume of all soybean contracts rose to 339,616 lots from 177,812 lots Friday.

 

Open interest rose 29,750 lots to 329,552 lots Monday.

 

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

 

A market rumor that the government may buy as much as 10 million tonnes more corn from producing areas in the east could be behind the grain's rise, but analysts said rising corn prices would reduce the likelihood that any such purchase plans would be implemented.

 

The government has been mulling such purchases for some time, but if it doesn't start to buy local corn by mid-March, it would be unlikely to make any purchases during the 2008/09 crop year to September because there wouldn't be much corn left on the market, said an analyst with Shanghai JCI, a commodities consultancy firm.

                                

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

Soybean           Sep 2009         3,510         Dn   45       339,616

Corn                Sep 2009         1,694         Up   18        234,532

Soymeal          May 2009          2,748        Dn   79        611,944

Palm Oil           May 2009          5,442        Up   30        236,406

Soyoil              May 2009          6,402        Dn   44        351,354