May 23, 2008

 

Friday: China soyoil futures settle down on government policy, supply pressure

 

 

China's soyoil futures traded on the Dalian Commodity Exchange settled lower Friday, pressured by the exchange's move to reduce speculative behavior.

 

The benchmark September 2008 soyoil contract settled RMB250, or 2.2%, lower at RMB11,040 a metric tonne.

 

The benchmark January 2009 soybean contract settled RMB37, or 0.8%, lower at RMB4,491 a metric tonne.

 

The Dalian bourse issued a statement Thursday that analysts said was meant to discourage short-term speculation in soyoil contracts.

 

Service charges for covering positions opened the same day will be doubled to RMB2 per lot as of Monday, according to the statement.

 

Trading volume for all soyoil contracts declined by more than a half, to 143,204 lots from 287,774 lots Thursday.

 

The harvest of new rapeseed, weakness in crude oil and Chicago Board Of Trade's soyoil overnight all pressured the edible oil market.

 

Although many analysts expected the deadly earthquake in Sichuan province to accelerate China's already rapid inflation, traders were concerned that the government would spare no effort in taming inflation.

 

China's top economic planner said Friday that price stability is "very important" in the aftermath of last week's earthquake, as it called for stronger supervision over prices.

 

It is critical that prices remain stable for essential goods, such as grains, edible oils and vegetables, the National Development and Reform Commission said.

 

The government is releasing 384,000 tonnes of state reserve grain to quake-hit areas in five provinces.

 

Analysts at Shanghai JCI, a commodity consultancy firm, said the uncertainty caused by the Argentine farmers' strike prompted some Chinese importers to delay or cancel some soybean cargoes, while some soyoil and palm oil cargoes were canceled due to low domestic edible oil prices.

 

Palm oil and corn futures settled lower while soymeal futures settled mixed.

 

Friday'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           4,491          Dn  37           786,614

Corn                 Jan 2009          1,887           Dn  20          473,324

Soymeal          Sep 2008           3,651           Dn  28          277,966

Palm Oil           Sep 2008         10,404          Dn 146              9,642

Soyoil              Sep 2008         11,040          Dn 250          143,204