May 29, 2008

Thursday: China soymeal futures settle up despite import tariff cut

 

China's soymeal futures traded on the Dalian Commodity Exchange settled slightly higher Thursday on tight cash supply, despite a temporary import tariff cut that will go into effect June 1.

 

The benchmark September 2008 contract settled RMB10, or 0.3%, higher at RMB3,734 a metric tonne.

 

Cash soymeal prices have been rising due to increased demand and low stocks.

 

As China's soymeal imports are not large and prices of quality South American soymeal are much higher than domestic prices, a lower tariff will have limited impact, said Cui Ruijuan, an analyst at Guangfa Futures Brokerage.

 

The import tariff on soymeal and peanut meal for feedmeal will be reduced to 2% from 5% from June 1-Dec. 31, the Ministry of Finance said in a statement published on its Web site Wednesday.

 

Soymeal contract gains lagged far behind the 2.6% increase in Chicago Board of Trade soymeal overnight on the imports tariff cut.

 

Soyoil import tariffs were expected to be reduced, but weren't. Soyoil prices were mostly higher. Xiao Jun, an analyst at commodities consultancy firm Shanghai JCI, said that given high global soyoil prices and the unchanged tax, imports will be more "rational," which can support soyoil prices.

 

The benchmark September 2008 soyoil contracts were RMB46 higher at RMB11,330.

 

Soybean prices were mostly lower. The benchmark January 2009 soybean contract settled RMB8 lower at RMB4,569/tonne.

 

The Argentine farmers' dispute with the government will be resolved, and that will bring supply pressure on the new soybean crop, said Liu Xinghua, an analyst at Great Wall Futures Co.

 

Palm oil futures settled higher while corn futures settled lower.

 

Thursday'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           4,569          Dn   8           417,194

Corn                 Jan 2009          1,894          Dn  10           402,986

Soymeal          Sep 2008           3,734          Up  10           332,400

Palm Oil           Sep 2008         10,600          Up  20            12,612

Soyoil              Sep 2008         11,330          Up  46           215,488