June 20, 2008

 

Friday: China soybean futures settle down in correction; no fuel impact

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled lower Friday in a correction of an earlier surge, as the increase in controlled fuel prices isn't having any impact on soy and soy products.

 

Benchmark January 2009 soybean contracts settled down RMB53, or 1.1%, at RMB4,949/tonne, after trading between RMB4,921 and RMB4,978/tonne.

 

"Soybeans were overbought earlier, and there was profit taking after the January contracts failed to break through the earlier high of RMB5,080 efficiently," said Liu Fang, an analyst at Datong Futures Brokerage Co.

 

However, benchmark contracts are well supported at RMB4,930/tonne, so there could be another push higher, he said, adding that weather in U.S. and Chinese soybean growing areas will be the focus for the market.

 

The increase Thursday in China's fuel and electricity prices haven't had any impact on prices of soybean and soy products, as imports satisfy most of China's soybean requirements so high global crude oil prices are already factored into local soy prices.

 

The National Development and Reform Commission said overnight that the price of gasoline and diesel will rise by 17% to 18% from Friday, marking the biggest increase in more than four years.

 

But domestic soybean prices have been following the gains of their counterparts on the Chicago Board of Trade, fully reflecting the impact of surging crude oil prices, said Liu Xinghua, an analyst at Great Wall Futures Co.

 

Soyoil futures, palm oil futures and soymeal futures settled lower, while corn futures settled mostly higher because of the fuel price hike.

 

Analysts said increases in grain production costs from the fuel price increases will be felt first in the autumn harvest, putting upward pressure on prices.

 

Friday's settlement prices in yuan per metric tonne and volume for all contracts in lots (one lot is equivalent to 10 tonnes):

 

Contract          Settlement          Price          Change          Volume

Soybean           Jan 2009           4,949          Dn  53           570,148

Corn                Jan 2009           1,916           Up   5           804,752

Soymeal          Sep 2008           4,186          Dn  77           504,952

Palm Oil           Sep 2008         10,580         Dn 158            22,006

Soyoil              Sep 2008         11,622         Dn 236           216,090