February 27, 2008

 

Wednesday: China soybean futures settle up on strong edible oil prices

 

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, supported by strong gains in edible oil contracts.

 

The new benchmark January 2009 soybean contract settled RMB52 higher at RMB4,745 a metric tonne.

 

Soyoil futures traded on the DCE and rapeseed oil futures traded on the Zhengzhou Commodity Exchange both hit 4% limit-up during the session.

 

Analysts said it's a market with a clear upside trading trend. Tight global supply of vegetable oil and increasing demand from China and India as well as rising crude oil prices are all strong factors for the rise in oilseeds.

 

Continued new highs for Chicago Board Of Trade soyoil overnight and weakness in the U.S. dollar also helped boost sentiment.

 

"Each occurrence of a downward correction will be another buying opportunity," said Dong Shuangwei, an analyst at Capital Futures, referring to Tuesday's moderate correction in domestic vegetable oil futures.

 

Meanwhile, Oilworld executive Thomas Mielke said Wednesday that China's total imports of vegetable oils and fats may for the first time reach 10 million tonnes in the marketing year to September 2008 on strong demand.

 

If this happens, China will become the first country to import 10 million tonnes of vegetable oils and fats in a single year, compared with the country's estimated imports of around 9 million tonnes of vegetable oils and fats in 2006-07.

 

Palm oil futures, soyoil futures and soymeal futures settled higher, but corn futures settled lower.

 

Crude palm oil futures are expected to fall below MYR2,900/tonne in 2008, London-based analyst James Fry said Wednesday.

 

He expects a slowdown in demand, particularly in China, over the next few months as the country would have arranged for sufficient purchases that could sustain demand anticipated for the summer Olympics.

 

Wednesday's settlement prices in yuan a metric tonne and the volume for all contracts in lots (One lot is equivalent to 10 tonnes):

 

               Contract     Settlement Price  Change     Volume

Soybeans Jan 2009      4,745         Up     52         822,026

Corn        Sep 2008      1,794        Dn     9          610,056

Soymeal  Sep 2008      3,566         Up     6          900,450

Palm Oil   May 2008     11,724        Up   240         30,180

Soyoil      Sep 2008     13,024        Up    404        620,750