April 28, 2009

 

Tuesday: China soy futures down; fall curbed, swine flu concerns ease

 

 

China's soy futures traded on the Dalian Commodity Exchange settled lower Tuesday, but the fall was contained as some traders sought bargain-hunting.

 

The benchmark January 2010 soybean contract settled RMB14 lower at RMB3,285 a metric tonne, or down 0.4%, compared with a 4% fall Monday.

 

Some market participants said swine flu may not be too much of a problem, adding the domestic market overreacted to the outbreak yesterday.

 

"Traders just use (the outbreak) as an excuse for correction, after the recent surge (in prices)," said Xiao Jun, an analyst with Shanghai JCI, a commodities consultancy firm, adding even if there were no outbreak, the market was likely to correct as futures contracts were overbought.

 

Soy meal's cash prices have been under downward pressure recently.

 

Meantime, the moderate reaction of U.S. stocks overnight and the market's ability to hold up fairly well in the face of the news also showed traders have digested the worst part of the news, said analysts.

 

Chicago Board of Trade benchmark soy are likely to consolidate around US$10.00 a bushel in the near term, with support at US$9.75, said Li Dongji, an analyst with the Guotai Jun'an Futures Brokerage.

 

However, Li Lei, an analyst with China National Cereals Trade Corp., warned "the disease impact will continue (for some time) and we shouldn't blindly follow (big buyers) in the market."

 

The World Health Organization's top official in China said Tuesday Chinese authorities have closed a school in the northern Shaanxi province where an outbreak of swine flu is suspected.

 

There are no confirmed cases of swine flu in China, but because the symptoms of the disease are similar to the common cold and flu, health authorities are investigating suspected cases in Shaanxi and elsewhere, said Hans Troedsson, the WHO Representative in China.

 

The trading volume of all soy contracts declined to 248,144 lots from 380,166 lots Monday.

 

The open interest fell 22,418 lots to 323,500 lots Tuesday.

 

Corn and soy oil futures settled slightly higher, while soy meal futures and palm oil futures settled lower.

 

Corn futures were supported by the government's purchases of cash corn from the market, said analysts.

 

Tuesday'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        Jan 2010           3,285          Dn   14          248,144

Corn             Sep 2009           1,664          Up    9           160,906

Soymeal       Sep 2009           2,618          Dn   27       1,690,636

Palm Oil        Sep 2009           6,046          Dn   60          487,034

Soyoil           Sep 2009           6,692          Up    2           724,770