June 23, 2009
Tuesday: China soy futures regain footing on equity market bounce
Soy futures on the Dalian Commodity Exchange clawed back early-session losses Tuesday, hitching onto a late rally in equity markets.
The benchmark January 2010 soy contract eventually settled 0.8% higher at RMB3,629 a metric tonne.
"Soy rebounded today on shares and as part of wider commodity gains in the late session," Nanhua Futures analyst Li Honglei said.
Soy opened in negative territory, underscoring the market's indifference toward the government's decision announced Tuesday to scrap export taxes on soy, wheat and rice.
"The policy had absolutely no effect on soy as China's export volume is too small," Li said.
Until equity markets recovered, the Dalian bourse took cues from the Chicago Board of Trade, where soy futures extended losses Monday on weak external markets, a lack of fresh fundamental support, improved Midwest crop weather and speculative-fund selling.
Market participants are hoping for upside if the weather turns in the U.S., which would pressure crop supplies, Li said.
Oversupply is still a concern for global and Chinese markets.
"The robust pace of China's soy imports has been the key factor on the demand side for the rally in prices in 2009 owing to its position as the world's largest consumer and importer," Barclays Capital said in a note Tuesday. "However, the strong level of imports has been driven in part by China's stockpiling plan and imports could potentially slacken in coming months from their strong levels earlier this year."
China's Commerce Ministry Tuesday revised downward its estimate for the country's soy imports in June from 4.62 million tonnes to 4.34 million tonnes, which would still be a monthly record.
China, the world's largest soy importer, is likely to import 3.56 million tonnes in July, the ministry said, based on preliminary estimates.
Market participants are awaiting fresh direction from the U.S. Department of Agriculture's next estimate of U.S. plantings of soy, corn and wheat, expected to be released June 30.
Corn futures took soy's lead in Dalian Tuesday, but soymeal, palm oil and soyoil futures posted losses.
Tuesday'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 3,629 Up 29 519,508
Corn Jan 2010 1,627 Up 6 113,676
Soymeal Jan 2010 2,831 Dn 19 1,621,418
Palm Oil Jan 2010 6,002 Dn 94 506,238
Soyoil Jan 2010 7,330 Dn 72 996,890
