March 28, 2006

 

Tuesday: China soybean futures settle mixed; concerns about demand

 

 

Soybean futures on China's Dalian Commodity Exchange settled mixed Tuesday as all contracts held in a tight range with no recovery in domestic demand from livestock and poultry breeders in sight, traders said.

 

The benchmark September 2006 soybean contract inched down RMB3 to RMB2,693 a metric tonne, after trading between RMB2,685 and RMB2,701/tonne.

 

Trade volume in Dalian's soybean futures market picked up slightly to 56,154 lots from Monday's 52,560 lots. One lot is equivalent to 10 tonnes.

 

"Although there was bargain hunting Monday, there was no fresh buying to pull prices up substantially because the demand side remains no good," said a trader at Zhejiang Tianma Futures Co.

 

Soymeal, a key byproduct of soybean processing, is widely used in making feedmeal in China, with livestock and poultry breeders major consumers of the commodity.

 

Traders said livestock breeders in northern China have no plans to raise more hogs in the near future, as oversupply was seen in the region.

 

Poultry breeders are even more cautious due to the bird flu issue, according to traders.

 

Analysts expect China's soybean futures and prices of other soybean-related products to hover around the current levels and maybe dip even lower at some point due to poor demand.

 

The No. 2 soybean contracts, which can be delivered with soybeans harvested from genetically modified crops, settled mostly higher in sluggish trade.

 

The benchmark September 2006 contract rose RMB2 to settle at RMB2,593/tonne, after trading between RMB2,583 and RMB2,598/tonne.

 

Soyoil futures settled mostly lower on profit taking following Monday's rise.

 

The benchmark September 2006 soyoil contract fell RMB7 to RMB5,158/tonne, after trading between RMB5,146 and RMB5,168/tonne.

 

Dalian's soymeal futures settled mixed in range-bound trade.

 

The benchmark September 2006 soymeal contract fell RMB4 to settle at RMB2,300/tonne, after trading between RMB2,289 and RMB2,310/tonne.

 

Corn futures traded on the exchange settled mixed as well, with the widely watched September 2006 contract settling unchanged at RMB1,407/tonne amid two-way trading.