June 26, 2009

Soy futures rose on the Dalian Commodity Exchange Friday, fueled by firmer oil prices, a weaker dollar and speculation that the government may be considering more policies to support soy prices.

 

The benchmark January 2010 soy contract settled 0.6% higher at RMB3,653 a metric tonne.

 

"Recent government policies were generally welcomed by the market, and there's some talk that the government is considering more steps to support prices," said Gao Yanrong, research manager for Dalu Futures. "Soy is leading the commodities rally today."

 

Ministry of Commerce personnel had been dispatched to investigate price disparities between imports and domestic soy, said Li Xiaoli of Beite Futures.

 

"There's no clear direction, but there are rumors that the government may issue more supportive policies that could limit imports," she said.

 

China is scrapping export taxes on soy from July 1.

 

But without firm cues, prices have generally stabilized this week, tracking the Chicago Board of Trade soy.

 

CBOT soy futures ended mixed Thursday, with nearby contracts gaining on the tight availability of old crops.

 

Chinese and other market watchers now await the U.S. Department of Agriculture's release of its next estimate June 30 on U.S. plantings of soy, corn and wheat.

 

In the coming months, a key price driver will be the pace of Chinese soy imports and the timing of the release of Chinese soy reserves, which will likely dampen prices temporarily, Barclays Capital said in a note Friday.

 

The weeks ahead should see choppy prices subject to changing risk appetites, weather and signs of weakness in Chinese imports, Barclays said.

 

But Barclays said it retains a positive bias and expects a strong rebound especially through the fourth quarter and into 2010.

 

Corn, soymeal, palm oil and soyoil futures posted gains on Dalian Friday.

 

Friday'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       3,653         Up   22         282,538

Corn             Jan 2010        1,626         Up    2           70,184

Soymeal       Jan 2010        2,904         Up   46      1,578,004

Palm Oil        Jan 2010        6,196         Up   92        519,356

Soyoil           Jan 2010        7,484         Up   84        858,404