June 25, 2007

 

Monday: China soybean futures settle down; 2H demand seen down

 

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Monday, as domestic demand could be lower than traders had expected in the second half of this year due to a slow recovery in the feedmeal sector.

 

The benchmark January 2008 soybean contract settled RMB17 lower at RMB3,227 a metric tonne.

 

Total trading volume declined to 153,290 lots from 174,718 lots Friday. One lot is equivalent to 10 tonnes.

 

China's soybean futures have been sluggish in recent weeks, despite the strong performance - until last week - of their counterparts in the Chicago Board of Trade.

 

CBOT soybean futures fell sharply last week, reversing earlier gains.

 

For the week, July soybeans were down 50 1/4 cents, settling at $7.97 a bushel, while November soybeans dropped 50 cents, settling at $8.30 3/4 a bushel Friday.

 

Foreign traders began to realize that China's soybean demand in the second half of this year may not be as good as they expected earlier, said Ding Haijiang, a trader at Nanhua Futures Co.

 

China is the world's largest soybean importer, sourcing most of its supplies from U.S., Brazil and Argentina.

 

He attributed the weaker domestic soybean demand to the slow recovery of feedmeal sector on livestock disease concerns.

 

Soymeal, made by crushing soybean, is used as animal feed.

 

Soymeal futures settled lower but soyoil futures settled mostly higher.

 

The most heavily traded January 2008 soymeal contract settled RMB34 lower at RMB2,558/tonne, while the benchmark September 2007 soyoil contract settled RMB26 higher at RMB7,590/tonne.

 

Traders said if soymeal demand failed to recover, soyoil futures have limited room to rise further.

 

Corn futures settled lower. The new benchmark January 2008 contract settled RMB6 lower at RMB1,605/tonne.

 

Trading volume for all corn contracts rose to 337,222 lots from 255,912 lots Friday.