April 27, 2009

Soy futures traded on China's Dalian Commodity Exchange settled sharply lower Monday, plagued by concerns about the possible effects of the swine flu outbreak in Mexico and the U.S.

The benchmark January 2010 soy contract settled down RMB138, or 4%, at RMB3,299 a metric tonne.

 

On the Chicago Board of Trade's electronic trading platform, corn and soy futures also fell sharply in Asian trading.

 

Although the disease hasn't been found in China yet, DCE contracts will track their CBOT counterparts closely as China is the biggest importer of U.S. soys, said Wang Runzhuo, an analyst with South China Futures Co.

 

The initial panic at the market's opening sent soy, soymeal and palm oil futures to their 5% lower limit.

 

Analysts said the outbreak will have only a limited impact on pork consumption in the near term as the new virus has not been detected on the mainland. But if the virus emerges in Chinese hog population, it could hit domestic pork and feed demand, they said.

 

China is a major hog producer, and the market is concerned that the disease will sooner or later spread to the country, which could lead to the slaughter of large numbers of hogs and a decline in feedmeal consumption, Wang said.

 

Although some analysts said the disease could bring broad losses in agricultural products, others said government policies may help to support prices somewhat.

 

The government has issued various measures to support domestic grain and oilseed prices recently, so room to the downside may not be large, said Lv Qinghai, an analyst with Tianqi Futures, adding that the market may consolidate in the near term.

 

The trading volume for all soy contracts rose to 380,166 lots from 168,548 lots Friday.

 

Open interest fell 1,594 lots to 345,918 lots Monday.

 

Corn futures, soymeal futures, soyoil futures and palm oil futures all settled sharply lower.

 

Monday'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

Soy                Jan 2010         3,299         Dn  138     380,166

Corn              Sep 2009         1,655         Dn   33      412,010

Soymeal         Sep 2009         2,645        Dn  125      299,658

Palm Oil          Sep 2009         6,106        Dn  252      333,564

Soyoil             Sep 2009         6,690        Dn  280      774,448