June 21, 2007

 

Thursday: China soybean futures settle mostly up a tad on CBOT gains

 

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly a tad higher Thursday, following overnight gains in the Chicago Board of Trade soybean futures.

 

The benchmark January 2008 soybean contract settled RMB10 higher at RMB3,283 a metric tonne.

 

Total trading volume shrank further to 115,576 lots from 179,372 lots Wednesday. One lot is equivalent to 10 tonnes.

 

"Despite the bullish outlook of CBOT soybean in longer term, DCE soybean futures are likely to lag its gains, given weaker domestic fundamentals," said a commodity strategist with an international trading firm in Beijing.

 

Weak demand for soymeal will keep a lid on the gains of soybean, said Zhang Yifan, a trader with China Grains & Oils Group Feed Corp.

 

Soymeal futures and soyoil futures settled mostly up, along with soybean futures.

 

The benchmark September 2007 soymeal contract settled RMB14 higher at RMB2,508/tonne.

 

Weak domestic demand of soymeal, which is used to produce animal feed, is likely to continue in the near term, as high pork prices have encouraged farmers to slaughter as many pigs as possible, resulting in a decline of feed demand, Zhang said.

 

Analysts said as domestic soymeal cash prices are trading at a discount to futures now, soymeal may see a downtrend in the next couple of months.

 

The benchmark September 2007 soyoil contract rose RMB30 to settle at RMB7,636/tonne.

 

Corn futures traded on the exchange settled higher, as short covering outpaced long liquidation, following losses earlier this week, analysts said.

 

The benchmark September 2007 contract gained RMB16 to settle at RMB1,594/tonne.

 

Trading volume for all corn contracts further shrank to 257,642 lots from 498,558 lots Wednesday.

 

"Given the high domestic inventory level and weak demand from feed producers, any further upside is very limited," said the analyst in Beijing.