Friday: China soy futures settle tad down; likely to consolidate

 

 

The benchmark January 2010 soy contract settled 0.2% lower at RMB3,710 a metric ton.

 

Analysts said Dalian soys will likely consolidate in the coming sessions as participants await clear cues from supply-and-demand fundamentals.

 

"Declining open interest shows that investors exited their positions to book profits as they came to realize the recent price surge wasn't fundamentally justified," said Gao Yanrong, an analyst with Dalu Futures Co.

 

Demand from downstream users, such as feedmeal producers, has remained weak since the outbreak of swine flu - despite the lack of any connection between pork consumption and the spread of the disease - and that will continue to weigh on soy prices in the near and medium term, analysts said.

 

"Feedmeal consumption dropped 15% on year in May, and that reflected people's worries about the pandemic," said Gao.

 

However, government soy buying will continue to lend support to prices in the medium term, while concerns about inflation prompt market participants to buy on fears of higher prices in the future, analysts said.

 

Trading volume of all soy contracts dropped to 414,102 lots from 556,516 lots Thursday.

 

Open interest declined 3,160 lots to 366,056 lots Friday.

 

Soymeal and soy oil contracts declined along with soy on profit-taking while corn and palm oil contracts were mixed.  

 

Contract     Settlement      Price       Change      Volume

soy            Jan 2010         3,710       Dn   7       375,388

Corn          Jan 2010         1,634       Up   2       78,838

Soymeal    Jan 2010          2,947       Dn   27     1,648,304

Palm Oil     Jan 2010          6,416       Dn   14     206,172