April 23, 2009
Thursday: China soy futures down on external cues; state buys in focus
Soy futures slipped slightly on the Dalian Commodity Exchange Thursday, dragged down by bearish external influences including weak equities and a stronger US dollar.
The benchmark January 2010 soy contract fell 0.5% to settle at RMB3,450 a metric tonne.
"Soy is on a path of correction, and global demand is still weak," said Xu Wenjie of Tianma Futures Co.
Soy futures on the Chicago Board of Trade ended mixed Wednesday, with distant contracts settling lower and nearby ones higher as tightening old crop supply factors continued to strengthen prices.
Still, government stockpiling in China is doing its part in propping prices up, even as demand is showing early signs of recovery, Xu said.
But prices are unlikely to post major gains in the near term as there hasn't been a significant change in the fundamentals, said Gao Yanrong of Dalu Futures Co.
The soy market was further supported by news China is likely to extend state stockpiling of soys by two months to June, Gao added.
"While the total volume (6 million tonnes) remains unchanged because the target has yet to be reached, it does suggest that at least in the months ahead the government will not be selling soys from its stockpiles, and imports will likely remain elevated," Barclays Capital said.
Demand is also expected to increase after May, as new piglets are born and the need for soy meal increases.
With soy as the cue, soy meal, palm oil and soy oil futures posted losses ranging from 0.2% to 1% Thursday. Corn futures gained 0.7% on relatively bullish supply-driven fundamentals.
Thursday's settlement prices in yuan a tonne for benchmark contracts and volume for all contracts in lots (one lot is equivalent to 10 tonnes):
Contract Settlement Price Change Volume
Soy Jan 2010 3,450 Dn 18 203,708
Corn Sep 2009 1,680 Up 12 242,944
Soy Meal Sep 2009 2,805 Dn 27 980,656
Palm Oil Sep 2009 6,290 Dn 16 650,356
Soy Oil Sep 2009 6,896 Dn 14 864,290
