June 22, 2011

Soy futures on the Dalian Commodity Exchange snapped four straight sessions of losses to settle slightly higher Tuesday (Jun 21), tracking a softer dollar and crude-oil gains as fears over the Greek debt crisis eased.

The benchmark January soy contract settled 0.3% higher at RMB4,410 (US$682)/tonne in very thin trade, with traders staying on the sidelines as soy's outlook remained bearish due to oversupply.

Luxembourg's Prime Minister Jean-Claude Juncker, who leads a group of euro-zone finance ministers, assured investors that the Greek debt crisis will be resolved.

Meanwhile, floods in south China heightened expectations that food prices may increase further.

"Soy and edible oil futures may stage mild technical rebounds over the next few sessions," but a sustained rebound hinges on US economic recovery and loose monetary policy in China, analysts said.

It's still too early to say China is near the end of a tightening cycle, as its central bank raised banks' reserve requirement ratio only a week ago and is likely to hike interest rates soon to combat high inflation.

Beijing will extend price caps on cooking oil sales up to August 15 to keep the market stable ahead of heavy consumption during the Mid-Autumn Festival, local media reported.