March 17, 2008

 

Monday: China soybean futures settle sharply down along with edible oil

 

 

Soybean futures traded on the Dalian Commodity Exchange settled sharply lower Monday, along with limit-down in most edible oil contracts.

 

The benchmark January 2009 soybean contract settled RMB122 lower at RMB4,400 a metric tonne.

 

Concerns of increased market supplypressured edible oil prices lower, despite the U.S. Federal Reserve announcing a discount rate cut of 25 basis points over the weekend, which should be supporting news for the commodities market.

 

The Fed was also widely expected to again cut the Fed funds rate by as much as a full percentage point to 2% at a regular meeting scheduled for Tuesday.

 

"Measures such as rate cuts are usually supportive for the commodities market, but now it is a sensitive period for (government) controls and the market mood is pretty unstable," said Huang Xiao, a manager at Capital Futures.

 

COFCO Ltd., China's biggest grain and oil trader, said Monday it aims to produce 42,000 tonnes of edible oil this month and release all of it to the market soon.

 

The company supplied the market with 60,260 tonnes this year as of March 1, up 22% on year, it said.

 

Meanwhile, China imported 350,000 tonnes of soybean oil in February, about twice the 175,053 tonnes it imported in February 2007, according to preliminary data issued by the General Administration of Customs Monday.

 

These increased supplies, along with the coming arrival of South American soybeans, damped sentiment.

 

"It's difficult to tell where the bottom is in this very weak market," said Gu Jianjun, an analyst at Jinyuan Futures.

 

Palm oil futures, soy oil futures and rapeseed oil futures, which are traded on the Zhengzhou Commodity Exchange, were all limit-down during the session.

 

Soymeal futures and corn futures also settled lower.

 

Monday's settlement prices in yuan a metric tonne and volume for all contracts in lots (one lot is equivalent to 10 tonnes):

 

              Contract       Settlement Price  Change     Volume

Soybean  Jan 2009      4,400         Dn    122        1,255,120

Corn        Sep 2008      1,811        Dn      5           521,838

Soymeal  Sep 2008      3,433         Dn    70           679,092

Palm Oil   May 2008     10,810        Dn    424         25,996

Soyoil      Sep 2008     11,500        Dn    478         67,364