June 26, 2007

 

Tuesday: China soybean futures settle down on ample supply, weak demand

 

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly lower Tuesday on ample supply and weak demand.

 

The benchmark January 2008 soybean contract settled RMB10 lower at RMB3,217 a metric tonne.

 

Total trading volume rose to 226,668 lots from 153,290 lots Monday. One lot is equivalent to 10 tonnes.

 

While soybean imports are at high levels, demand for soyoil and soymeal lag supply.

 

Soyoil demand is usually sluggish in summer and feedmeal sector demand recovery has been slow.

 

Traders shrugged off news that drought in the northeast, China's major soybean and corn growing region, will affect crop growth.

 

About 2.05 million hectares, or 49% of the total farming area in Liaoning province and 2.67 million hectares, or 66.5% of the total farming area in Jilin province have been affected by drought, said the official Xinhua News Agency.

 

Soymeal futures and soyoil futures settled mostly lower, tracking soybean losses.

 

The most heavily traded January 2008 soymeal contract settled RMB14 lower at RMB2,544/tonne, while the benchmark September 2007 soyoil contract settled RMB2 lower at RMB7,588/tonne.

 

Corn futures settled lower.

 

The new benchmark January 2008 contract settled RMB21 lower at RMB1,584/tonne.

 

The benchmark will continue to fall until it is below the September 2007 contract, which may signal the arrival of a bear market, said Li Yang, an analyst at Yongan Futures.

 

The September contract settled RMB9 lower at RMB1,570/tonne.

 

Corn futures will then consolidate before the government's policy toward corn processing industry becomes clearer, he added.

 

China said earlier this month it won't approve any more projects that use foodstuffs in the production of ethanol despite the country's growing demand for the cleaner fuel.

 

Trading volume for all corn contracts rose to 637,686 lots from 337,222 lots Monday.