May 13, 2008

 

Tuesday: China soybean futures settle up on supply shortage; top seen

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday due to a limited supply of domestic soybeans.

 

The benchmark January 2009 soybean contracts settled RMB50 higher at RMB4,461 a metric tonne, or up 1.13%, after trading between RMB4,421-4,506/tonne.

 

"The rise was mostly liquidity driven, and could be short term" as there were signs of profit taking in the market, said Gao Yanrong, an analyst at Dalu Futures Co.

 

A difference of nearly RMB1,000 between September 2008 contracts and January 2009 contracts is too big to be reasonable, showing the old crop contracts may have seen a top, he added.

 

The Sep 2008 contracts settled at RMB5,408/tonne Tuesday.

 

The central bank's decision to raise banks' reserve requirement ratio by 50 basis points, announced after the earthquake happened Monday afternoon, showed the government's determination to tame domestic inflation.

 

China's consumer price index growth hit 8.5% on year in April, up from March's 8.3% rise and market expectations of an 8.4% increase.

 

Analysts said the government may also tighten its price control measures, so any rise in major agricultural products could be capped.

 

So far there is little indication that the massive earthquake that hit China's Sichuan province Monday would have any substantial effect on agriculture production, they said.

 

But prices of major commodities in the province may rise in the near term as people rush to supermarkets to purchase goods for storage, while transportation of commodities could be blocked or give way to rescue work.

 

According to Mike Tannura, meteorologist and commodity analyst with U.S-based agency T-storm Weather Llc., the Sichuan province accounts for 8% of China's corn production, 14% of its rapeseed production, 2% of its soybean production and 7% each of both spring and winter wheat production.

 

Palm oil futures settled mostly lower but soyoil futures settled higher.

 

Corn futures and soymeal futures settled mostly lower.

 

The following are Tuesday's settlement prices in yuan a metric tonne and volume for all contracts in lots (one lot is equivalent to 10 tonnes):

 

Contract          Settlement          Price          Change          Volume

Soybean           Jan 2009           4,461          Up  50          1,296,944

Corn                 Jan 2009          1,969          Dn  14            520,150

Soymeal           Sep 2008          3,556          Dn  19            383,272

Palm Oil           Sep 2008         10,624          Dn  94             46,198

Soyoil              Sep 2008         11,358          Up  32            286,510