March 12, 2008

 

Wednesday: China soybean futures settle down; concerns on tighter controls

 

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday, as market sentiment was nervous amid concerns over tightening measures by the government, including controls on prices.

 

The benchmark January 2009 soybean contract settled RMB93 lower at RMB4,470 a metric ton.

 

Concerns of tightening policies, such as hikes in the interest rate and banks' reserve requirement ratio, kept traders on the sidelines.

 

Food prices rose 23.3% in February, compared with 18.2% growth in January, driving the country's consumer price index on-year growth to 8.7%, the highest in almost 12 years.

 

"The market is likely to consolidate in big ranges in the short term as sentiment is pretty nervous," said Huang Xiao at Capital Futures.

 

However, analysts said the strong fundamentals -- global tight supply in edible oil and oilseeds -- haven't changed, adding the market will continue to test new highs after the consolidation.

 

The U.S. Department of Agriculture yesterday cut 2007-08 U.S. soybean ending stocks to 140 million bushels, from 160 million bushels forecast in February, and below the average analyst guess of 153 million bushels.

 

U.S. soyoil ending stocks were estimated at 2.837 billion pounds, up from 2.502 billion pounds, while soyoil exports were raised, reflecting strong sales and shipments through February, USDA reported.

 

Palm oil futures settled sharply down Wednesday, shrugging off the record high crude prices overnight and a weak dollar.

 

Soyoil hit limit-down during the session, as traders expect more soyoil to be released by the government from late next week. An official said earlier this week the government will release more edible oil into the market if prices keep rising.

 

Soymeal futures and corn futures also settled lower.

 

Wednesday'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       4,470         Dn  93    1,693,862

Corn         Sep 2008       1,821         Dn  13       785,666

Soymeal    Sep 2008      3,468         Dn  55       864,570

Palm Oil    May 2008     11,032        Dn 226        53,926

Soyoil       Sep 2008     11,992         Dn 160      548,410