February 28, 2006

 

Tuesday: China soybean futures settle mostly higher on CBOT

 

 

Soybean futures on China's Dalian Commodity Exchange settled mostly higher Tuesday on overnight gains on the Chicago Board of Trade, but investors were still sidelined.

 

The benchmark September 2006 soybean contract settled RMB7 higher at RMB2,717 a metric tonne.

 

Total trading volume shrank to 59,802 lots from 80,860 lots Monday. One lot equals to 10 tonnes.

 

Open interest for all contracts fell 1,858 lots to 270,624 lots.

 

"Local investors are waiting for direction to be given by CBOT, which is testing the bottom," said Zeng Xuezhou, an analyst with Beite Futures Co. "There is more negative news than supportive news."

 

Analysts said rains in South America and a bird flu threat linked to birds migrating in spring are weighing on prices.

 

They also said they are unsure whether, and to what extent, soy will benefit from a bullish corn market.

 

Soymeal and soyoil futures settled higher along with soybeans.

 

The benchmark September 2006 soymeal contract rose RMB10 to settle at RMB2,338/tonne.

 

The benchmark September 2006 contract settled RMB36 higher at RMB5,193/tonne, after trading between RMB5,166/tonne and RMB5,220/tonne.

 

The benchmark September No. 2 soybean contract, which is encouraged to be delivered with soybeans harvested from genetically modified crops, rose RMB10 to settle at RMB2,588/tonne.

 

China has a total of 15 billion fowl in 2005, accounting for 21% of the world's total, the Ministry of Agriculture said on its Web site Monday.

 

Analysts said the large number makes the industry more vulnerable to an outbreak of bird flu.

 

Corn futures settled mostly lower on profit-taking, with the benchmark September 2006 contract falling RMB10 to settle at RMB1,472/tonne.

 

Total trading volume shrank to 579,976 lots from 758,272 lots Monday, while open interest for all contracts rose steadily by 6,324 lots to 850,654 lots.

 

Despite the pressure for a downward correction, the stable open interest implies many long position holders are still confident of the long-term trend, while technical support at RMB1,400/tonne is strong, given rising physical prices, said Zeng.