March 25, 2009

Soybean futures drifted lower on the Dalian Commodity Exchange Wednesday, extending a correction from U.S.-led gains last week, as expected import increases weighed on trading sentiment.

 

The benchmark September 2009 soybean contract lost 0.6% to settle at RMB3,592 a metric tonne.

 

Soybean futures on the Chicago Board of Trade's electronic bourse slipped during the Asian trading day, sapping momentum at Chinese counterparts despite earlier upside from a soybean farmers' strike in Argentina.

 

With world buyers shifting their buying interest to South America, the strike could tighten U.S. stocks and push prices higher.

 

But these concerns appear to have lost traction as the prospect of increased imports in China outweighed bullish news from the Americas.

 

"We're going to see a lot of shipments come in toward the end of March through April, and that's when there will be a lot of supply-led pressure on prices," said Tu Xuan, an analyst with Shanghai JCI Futures.

 

Cheaper soybean imports could erode domestic prices to a greater extent as government plans to amass a 3 million-tonne stockpile are completed.

 

Soymeal futures posted gains, while corn, palm oil and soyoil futures settled lower.

 

Agricultural products took cues from a correction that spanned many commodities, said Dong Liang, an analyst with Hongyuan Futures.

 

But demand prospects were firmer for soymeal, as warmer weather prompted the replenishing of feed stocks.

 

"Soy products have made fairly steady gains since early February, and their profit margins have been growing - and now that's meeting some resistance, which is natural," Dong said.

               

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

                 

Contract         Settlement       Price       Change      Volume

Soybean         Sep 2009        3,592       Dn   21      248,456

Corn              Sep 2009        1,709        Dn    5        90,360

Soymeal         Sep 2009        2,771        Up   12   1,198,672

Palm Oil          Sep 2009        5,412        Dn   56     112,696

Soyoil             Sep 2009        6,370        Dn   44     607,796