March 11, 2008

 

Tuesday: China soybean futures settle higher on inflation expectations

 

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday on expectations of continued high inflation.

 

The tumble in earlier sessions also provided a buying opportunity for speculative funds, said analysts.

 

The benchmark January 2009 soybean contract settled RMB101 higher at RMB4,563 a metric ton.

 

China's consumer price index rose 8.7% on year in February, driven by continued increases in food prices and snowstorms earlier this year, the National Bureau of Statistics said Tuesday.

 

The gain in the key inflation gauge exceeded January's 7.1% rise, and was the fastest since May 1996.

 

Food prices rose 23.3% in February, compared with 18.2% in January.

 

"Soybean prices are likely to test new highs after the recent consolidation, along with high inflation," said Galaxy Futures analyst Wang Xiaoguang.

 

He expects soybean prices to have touched bottom after the recent correction.

 

The overall supply is tight amid increasing domestic demand, which is far in excess of possible output growth from acreage expansion.

 

The new high in crude prices overnight and the dollar's weakness will continue to support commodities market as a whole, Wang said.

 

Palm oil futures settled higher but soyoil futures settled mostly down on concerns of increased market supply.

 

Assistant Commerce Minister Huang Hai said over the weekend the government has been releasing soyoil reserves into the market and will increase the supply if prices keep rising.

 

China's soyoil prices have surged by almost 30% since the start of the year.

 

Earlier this month, National Development and Reform Commission, the country's economic planner, urged local governments to guarantee edible oil supply through release of local reserves and more soybean and edible oil imports.

 

But analysts don't expect the fall in soyoil prices to be steep due to tight supply.

 

"Anyway, vegetable oil prices will remain high before the arrival of new rapeseed from June," said Xiao Jun at Shanghai JCI.

 

Soymeal futures and corn futures both settled up.

 

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

 

              Contract  Settlement Price  Change     Volume

 

Soybean       Jan 2009        4,563         Up 101      860,566

Corn            Sep 2008        1,834          Up  26      735,614

Soymeal      Sep 2008        3,523          Up  60      796,854

Palm Oil       May 2008      11,258          Up  64       49,164

Soyoil          Sep 2008       12,152         Dn  60      897,612