April 16, 2007

 

Monday: China soybean futures settle lower; supply exceeds demand

 

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly lower Monday amid continued oversupply in the physical market, but the downward correction is likely to be brief, said traders.

 

The benchmark September 2007 contract settled RMB11 lower at RMB3,123 a metric tonne.

 

Total trading volume declined to 174,496 lots from 254,590 lots Friday. One lot is equivalent to 10 tonnes.

 

"There was too much soybean imports arriving after the Chinese Spring Festival (Lunar New Year), leading to a short-term oversupply," said Gu Jianjun, a trader at Jinyuan Futures in Shanghai.

 

The Chinese Spring Festival fell on Feb. 18 this year. Consumption of soybeans typically rises during this time due to greater demand for foodstuffs.

 

China imported 2.11 million soybeans in March, compared with 1.18 million in February, according to preliminary data provided by the General Administration of Customs.

 

Meanwhile, consumption of soymeal, which is used as animal feed, is sluggish, said traders.

 

Gao Yanrong, a trader at Dalu Futures Co., pegs support for the benchmark September soybean contract at RMB3,100/tonne in April.

 

Soymeal is produced by crushing soybeans.

 

Soymeal futures settled lower while soyoil futures settled higher.

 

The benchmark September 2007 soymeal contract fell RMB22 to settle at RMB2,507/tonne, while the benchmark September 2007 soyoil contract settled RMB104 higher at RMB7,082/tonne.

 

Gu said soyoil prices are supported by rising crude oil prices. Higher crude prices make biodiesel more attractive as a fuel. This in turn boosts demand for soyoil, a source of biodiesel.

 

China's soyoil imports in March were at 220,000 tonnes, the customs department said Monday.

 

Soyoil imports in the first three month totaled 580,000 tonnes, up 4.3% from a year earlier.

 

Corn futures settled lower. The benchmark September 2007 contract settled at RMB1,658/tonne, down RMB10.

 

Trading volume for all corn contracts rose to 452,616 lots from 409,988 lots Friday.