June 12, 2008

 

Thursday: China soybean futures surge on CBOT's rise, bullish charts

 

 

Soybean futures traded on the Dalian Commodity Exchange settled sharply higher Thursday following the overnight surge in the Chicago Board of Trade soybean futures.

 

Bullish charts indicate potential for a further upside, and the rise in crude oil prices is fueling the sentiment, analysts said.

 

The benchmark January 2009 soybean contract settled 3.2% higher at RMB5,007 a metric tonne, after trading between RMB4,950/tonne and RMB5,080/tonne.

 

CBOT July soybeans Wednesday settled 70 cents higher at US$15.16 1/2 a bushel and November soybeans ended 68 cents higher at US$15.09 a bushel on concerns of production getting affected by floods in the U.S. Midwest and its impact on markets outside.

 

"This is an unchartered territory, which makes longs a bit jittery, so they begin to liquidate some positions at highs," said Gao Yanrong, an analyst at Dalu Futures.

 

Though fundamentals are good, they cannot be cited as the main reason any longer, given the record prices currently, they said.

 

Soymeal and soyoil futures also settled sharply higher.

 

Analysts said lower arrival of imports of soymeal recently are underpinning prices, though demand for soyoil is seasonally relatively weak.

 

"The whole agricultural complex looks rather bullish at the moment because of the record crude oil prices, so even if prices are considered as going beyond fundamental support for now, there can still be further upside," said an analyst at an international trading house.

 

Corn futures remained unchanged.

 

"In such a bullish environment, the bird flu case in Hong Kong is being ignored. As long as there's no massive outbreak in China, its impact won't be palpable," Gao said, though massive slaughters of poultry can ignite concerns of a drop in demand for feedmeal, which is made from corn and soymeal.

 

Hong Kong government said late Wednesday they plan to slaughter all poultry in the territory's street markets after detecting the dangerous H5N1 bird flu virus.

 

The government also temporarily banned supplies of all live poultry from mainland China and local farms.

 

Thursday's settlement prices in yuan a metric tonne and volume for all contracts in lots:

 

Contract            Settlement          Price          Change          Volume

Soybeans            Jan 2009           5,007          Up 153          617,888

Soymeal             Sep 2008           4,089          Up  82          596,006

Soyoil                 Sep 2008         11,948          Up 404          182,594

Corn                   Jan 2009           1,916           Up   7          668,626

Palm Oil              Sep 2008         10,966          Up 260           15,612