May 8, 2009

Soy futures fell slightly on the Dalian Commodity Exchange Friday, losing momentum amid profit-taking and oversupply concerns as imports flood the market.

 

The benchmark January 2010 soy contract inched down 0.1% to settle at RMB3,497 a metric tonne.

 

Coming off a week where soy futures had risen 3.7% since last Thursday, a retreat was in order, said Gao Yanrong of Dalu Futures.

 

But some market participants were worried that China may have binged too heavily on cheap soy in the past few months.

 

"We bought a lot of foreign soys from the United States," Gao said. "There's concern that this is going to put pressure on prices, and we're seeing that concern today."

 

Soy imports in the last two weeks are estimated to have reached around 4.2 million tonnes, higher than for the entire month of March, Gao said.

 

"Soy import volumes for April and May are expected to be very high," he said.

 

But import prices have also risen to a point which should slow the influx, Gao said. Foreign soys now stand at around RMB3,800/tonne, above the domestic stockpile price of RMB3,700/tonne.

 

Dalian also saw thinner trade Friday.

 

"The government's plans to stockpile has actually dampened soy futures trading activity," said Wang Shaoguang, Galaxy Futures.

 

Soy futures on the Chicago Board of Trade ended lower Thursday, ending 16 cents lower, though they regained 10 cents on the electronic bourse overnight.

 

Analysts, including Gao, scotched rumors that China was planning to cancel 300,000 tonnes of old crop purchases from the U.S., which had contributed to CBOT's fall Thursday.

 

Fundamentals continue to play in soy's favor, analysts said.

 

"Across the grains, we continue to view soys most positively in the near term with the old crop underpinned by the decline in U.S. stocks, supply shortfalls and ongoing strength in Chinese imports," Barclays Capital said late Thursday.

 

Corn, soy meal, palm oil and soy oil futures fell across the board Friday.

 

Friday'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            3,497          Dn   4        218,672

Corn              Sep 2009           1,659           Dn   4         70,224

Soymeal        Sep 2009            2,859          Dn   2        744,460

Palm Oil         Sep 2009            6,868         Dn   16       620,418

Soyoil            Sep 2009            7,586         Dn   46    1,349,802