June 18, 2009

Soy futures on the Dalian Commodity Exchange settled steady Thursday as market participants struggled to duplicate overnight gains at the Chicago Board of Trade in the face of oversupply worries.

 

Analysts say supply concerns have resurfaced in a market that regards all positive news as having already been factored into current prices.

 

The benchmark January 2010 soy contract ended just RMB1 higher at RMB3,646 a metric tonne.

 

"The outlook for soy is not looking that good, and we think soy futures are coming up short against their resistance," said Gao Yanrong, research manager for Dalu Futures.

 

"All the good news we've seen from indicators and the dollar appear to have already been factored into prices," he said. "External markets may also be heading for a correction."

 

Without fresh positive cues, supply questions hung over the Chinese market.

 

In the January-May period, soy imports rose 27%, and Gao warned that more soy were on the way.

 

Imports in June and July are estimated to reach about 4.7 million and 3.6 million tonnes, respectively, compared with 3.6 million tonnes and 3.5 million tonnes last June and July.

 

"That's horrifying, because demand is still problematic," Gao said.

 

The average monthly import volume for the first five months of 2009 was 3.5 million tonnes, while the average for last year was 3.1 million tonnes.

 

As the current crop year draws to a close, import forecasts for the crop year that begins in October project a decline of 7.5% on year due to faltering demand for feedmeal and a likely increase in supply from reserve soy, the China National Grain and Oils Information Center said earlier this week.

 

CBOT soy futures climbed Wednesday on speculative short covering and technical buying. The November contract ended 2% higher at US$10.50 a bushel.

 

Palm oil and soyoil futures fell in Dalian Thursday, while corn and soymeal futures posted small gains.

 

Thursday's settlement prices in yuan a metric tonne for benchmark contracts and volume for all contracts in lots (One lot is equivalent to 10 tonnes):

                   

Contract     Settlement     Price         Change       Volume

Soy            Jan 2010       3,646        Up    1         155,086

Corn           Jan 2010      1,628        Up    4           56,950

Soymeal     Jan 2010       2,912        Up     6     1,835,562

Palm Oil      Jan 2010       6,200        Dn   70        383,994

Soyoil         Jan 2010       7,538        Dn   54     1,003,828