March 13, 2006

 

Monday: China soybean futures settle mixed; corn continues downtrend

 

 

Soybean futures on China's Dalian Commodity Exchange settled mixed Monday in subdued trading, as soybean futures traded on the Chicago Board of Trade didn't provide clear direction, analysts said.

 

The benchmark September 2006 soybean contract opened at an intraday low of RMB2,692 a metric tonne on losses in soybean futures in after-hours CBOT trading during Asian trading hours, analysts said, but settled RMB5 lower at RMB2,705/tonne after bargain hunting trimmed losses.

 

Trading volume for all soybean contracts fell to 42,166 lots from 47,704 lots Friday. Total open interest rose 7,850 lots to 275,912 lots. One lot equals to 10 tonnes.

 

Although CBOT May soybeans closed at $5.89 1/4 a bushel after setting a six-week low of $5.79 per bushel Friday, local investors remained on the sidelines pending clearer direction, said Liu Xinghua, an analyst with Great Wall Futures Co.

 

"Investors still consider Friday's losses to be range-bound, and even if the trend is downward, it will take more time verify (the trend)," Liu said.

 

No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mixed as well.

 

The benchmark September contract rose RMB5 to settle at RMB2,625/tonne.

 

Soymeal futures settled mixed along with soybeans. The benchmark September 2006 contract fell RMB3 to settle at RMB2,319/tonne, after trading between RMB2,310/tonne and RMB2,327/tonne.

 

Soyoil futures settled slightly higher. The benchmark September 2006 contract settled up RMB9 at RMB5,231/tonne.

 

It's a predictable technical rebound given last week's losses, said Li Honglei, an analyst at Nanhua Futures Co.

 

Fundamentals are supportive for prices, analysts said, as crushers are producing less soymeal because of the spread of bird flu and soyoil output has fallen as a result, while demand has remained strong.

 

The crushing of soybeans produces soymeal for animal feed production and soyoil for cooking.

 

Corn futures settled slightly lower on long liquidation, continuing its downward trend.

 

The most widely held September 2006 contract settled RMB7 lower at RMB1,428/tonne, after trading between RMB1,425/tonne and RMB1,433/tonne.

 

Total trading volume fell to 363,432 lots from 435,916 lots Friday. Open interest for all contracts fell by 1,756 lots to 683,784 lots.

 

Technical support for the benchmark will be around RMB1,380-RMB1,400/tonne, analysts said, while shrinking demand for feed amid the spread of bird flu virus will continue to weigh on prices.

 

Corn is mainly used to produce animal feed in China.