March 05, 2008

 

Wednesday: China soybean futures settle sharply lower on profit-taking

 

 

Soybean futures traded on the Dalian Commodity Exchange settled sharply lower Wednesday as investors took profits amid concern over the government's tightening policies.

 

The benchmark January 2009 soybean contract settled RMB179 lower at RMB4,696 a metric tonne after hitting limit-down during the session.

 

"Given the strong speculative force, the volatility was expected," said Gao Yanrong at Dalu Futures.

 

China's most important political meetings - the National People's Congress meeting and Chinese People's Political Consultative Conference meeting - kicked off this week, and the government usually doesn't want to see sharp fluctuations in domestic financial markets during the meetings.

 

Agricultural products futures, especially for edible oil, have been surging recently on expectations of a global supply shortage, and now investors need to find opportunities for profit-taking.

 

The NPC and CPPCC meetings provided such an opportunity, said Zeng Xuezhou, an analyst at Beite Futures, adding the market may see a further downward correction in the coming sessions.

 

Premier Wen Jiabao said Wednesday in the government's working report that "preventing over-rapid growth in overall prices is (China's) major task in macro adjustment this year."

 

Measures including increasing the production of grain, edible oil and meat, strictly curbing the blind expansion of corn's industrial use as well as improving the state reserves system will be taken to guarantee market supply of major commodities and price stability, Wen said.

 

Although these measures are just a repetition of the government's earlier statements, it shows Beijing's willingness to maintain a stable financial market, said analysts.

 

Meanwhile, the Ministry of Finance said Wednesday the 1% temporary soybean import duty will be extended to Sept. 30 from end-March.

 

China cut the import duty on soybeans from October 2007 to 1% from 3%, hoping to curb rising inflation pressure due to an increase in food prices.

 

Zeng pegged strong support for the benchmark soybean contract at RMB4,500/ton, and RMB12,700/tonne for benchmark soyoil contract.

 

Palm oil futures and soyoil futures also settled sharply lower, with most contracts hitting limit-down during the session.

 

Soymeal futures and corn futures also settled lower.

 

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

 

              Contract  Settlement Price  Change     Volume

 

Soybean        Jan 2009        4,696           Dn 179     1,333,658

Corn             Sep 2008        1,852           Dn  17     1,435,220

Soymeal       Sep 2008         3,553          Dn 106       881,244

Palm Oil       May 2008       12,106           Dn 490           7,908

Soyoil          Sep 2008       13,500           Dn 544       172,184