February 27, 2006

 

Monday: China soybean futures settle lower on bird flu; corn mixed

 

 

Soybean futures on China's Dalian Commodity Exchange settled lower Monday on worries that a spread of bird flu will further pressure soy demand.

 

The benchmark September 2006 soybean contract settled RMB19 lower at RMB2,710 a metric tonne, as some players set up short positions.

 

Total trading volume rose slightly to 80,860 lots from 68,652 lots Friday. One lot equals 10 tonnes.

 

Soymeal futures settled lower with soybeans.

 

The benchmark September 2006 soymeal contract fell RMB32 to settle at RMB2,328/tonne, after trading between RMB2,318/tonne and RMB2,344/tonne.

 

Open interest for all soymeal contracts rose 14,434 lots to 348,126 lots.

 

China Saturday reported two new human bird flu cases in Zhejiang and Anhui provinces, respectively, while more European countries confirmed outbreaks over the weekend.

 

"Bird flu concerns dominated the session," said Yu Junli, an analyst with Green Futures Co.

 

Meanwhile, local soymeal trading is so inactive that crushers seldom get new contracts, said analysts.

 

Since three weeks ago when the market reopened after the Chinese New Year holiday, local crushers have been reducing soymeal output with shrinking feed demand, as well as to control the market's supply.

 

Soyoil futures settled lower as well, with the benchmark September 2006 contract RMB25 lower at RMB5,157/tonne, after trading between RMB5,136/tonne and RMB5,194/tonne.

 

However, a drop in soymeal production has also resulted in less soyoil output, though demand for the latter hasn't shrunk much, which in turn will support the prices, said Yu.

 

Dalian's No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled lower.

 

The benchmark September 2006 No. 2 soybean contract fell RMB14 to settle at RMB2,578/tonne.

 

Corn futures settled mixed, with the benchmark September 2006 contract unchanged at RMB1,482/tonne.

 

Total trading volume rose to 758,272 lots from 614,066 lots Friday.

 

Open interest for all corn contracts rose 20,268 lots to 844,330 lots.

 

Analysts noted some long liquidation on reports that China may temporarily suspend corn exports from March.