June 24, 2011

Thursday: China soy futures trend down over CBOT grain losses

Soy futures on the Dalian Commodity Exchange snapped a two-day rally to settle lower Thursday (June 23), tracking overnight losses in corn and wheat futures in the US.

The benchmark January soy contract settled 0.6% lower at RMB4,391 (US$679)/tonne in a day of thin trade.

July CBOT soy fell 1.4% to close at a one-month low of US$13.3025 a bushel, after July wheat fell 5.3%, its biggest daily decline since May 11, as US wheat is facing greater competition in exports from the Black Sea region.

Corn futures hit the daily lower trading limit of US$0.30 a bushel to reach a six-week low, falling in tandem with wheat.

China's May animal feed production rose 12.1% from April to 15.36 million tonnes, according to data from the National Bureau of Statistics Beijing Shennong Kexin Agribusiness Consulting Co. said in a research note.

Soaring pork prices are expected to support soymeal prices further as demand for soymeal as feed is increasing quickly, the company said.

Soymeal futures are more resistant to negative factors as they are supported by strong cash market demand, but edible oils are still under pressure as their prices remain tightly controlled due to inflation concerns.