May 29, 2007

Tuesday: China soybean futures settle down; market takes breath on CBOT close

Soybean futures traded on the Dalian Commodity Exchange settled mostly lower Tuesday, lacking guidance as the Chicago Board of Trade was closed Monday.

The new benchmark January 2008 soybean contract settled RMB36 lower at RMB3,344 a metric tonne.

Total trading volume declined to 260,582 lots from 334,146 lots Monday. One lot is equivalent to 10 tonnes.

CBOT markets was closed Monday in observance of the Memorial Day holiday.

"The domestic market took this chance to take a breath," said Gao Yanrong, a trader at Dalu Futures.

Soymeal futures contracts settled mostly lower, but soyoil futures settled mostly higher.

Despite rising pork prices throughout the country, analysts said feedmeal demand is unlikely to surge in the short term, as farmers aren't eager to increase their livestocks.

Analysts said the high cost of feedmeal and the risks of epidemic diseases kept many farmers at sidelines.

"The breeding cycle of a pig usually lasts for nine months, and farmers are concerned pork prices may be lower by that time," said Wei Gang, an analyst at China Cereals & Oils Business Net.

The benchmark September 2007 soymeal contract settled RMB31 lower at RMB2,586/tonne, while the benchmark September 2007 soyoil contract settled RMB4 higher at RMB7,796/tonne.

Soyoil prices may be supported by low soymeal prices, as processing plants need to cover their losses with high soyoil prices, said analysts.

Soymeal and soyoil are made by crushing soybeans.

Gao said he expects the benchmark soyoil contract to meet strong resistance at RMB8,000/tonne. The contract traded between RMB7,722-RMB7,940/tonne Tuesday.

Corn futures settled lower. The benchmark September 2007 contract settled RMB9 lower at RMB1,664/tonne.

Trading volume for all corn contracts rose to 285,536 lots from 137,156 lots Monday.