June 4, 2008

 

Wednesday: China soyoil futures fall on export sop removal; soybean up

 

 

China's soyoil futures traded on the Dalian Commodity Exchange fell Wednesday on concerns that local supplies will increase with the government planning to end an export-tax sop.

 

The benchmark September 2008 soyoil contracts settled RMB4 lower at RMB10,976 a metric tonne.

 

The benchmark January 2009 soybean contracts rose RMB10 higher at RMB4,513/tonne, or 0.2%, after trading between a narrow range of RMB4,493-RMB4,534/tonne.

 

The Ministry of Finance said late Tuesday that it will cancel export-tax rebates on some vegetable oils from June 13. The products include soyoil, palm oil, peanut and olive oils.

 

Although China is not a big exporter of these oils, the move, along with last week's import tariff cut on some edible oils, show the government won't loosen its grip on prices, analysts said.

 

"The market is now cautious," with few people willing to push prices higher, said Xiao Jun, an analyst at commodity consultancy firm Shanghai JCI.

 

China boosted export of soyoil 26% in the first four months to 29,182 tonnes to tap the global surge in prices.

 

Concerns of higher food inflation, partly due to a recent earthquake in the grain-producing Sichuan province, has prompted the government to announce measures to control costs.

 

China's consumer price index rose to around a 12-year high of 8.5% in April.

 

Soybean and soy products also face an increase in supply with the harvest season starting in September and expectations that farmers in Argentina will end their strike.

 

It is just a matter of time before the farmers strike in Argentina ends, said Gao Yanrong at Dalu Futures Co.

 

Palm oil futures, soymeal futures and corn futures settled lower.

 

Wednesday'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          4,513          Up  10           493,304

Corn                  Jan 2009         1,883           Dn   6           192,022

Soymeal           Sep 2008          3,699          Dn  27           291,834

Palm Oil            Sep 2008        10,382          Dn  44            13,854

Soyoil               Sep 2008        10,976          Dn   4            146,780