June 27, 2011

Friday: China soy futures gain on oil and local equities

Soy futures on the Dalian Commodity Exchange ended higher Friday (Jun 24) in a technical rebound, as crude oil gained in Asian trading and sharply higher local equities lent momentum to agricultural commodities.

The benchmark January soy contract settled 0.4% higher at RMB4,407 (US$681)/tonne on volume of 78,042 lots, up from 54,738 lots on Thursday (Jun 23). One lot of soy on the Dalian Commodity Exchange is equivalent to 10 tonnes.

However, "the strength of the soy rebound will be limited" unless fresh fundamental supply and demand cues emerge, Zhonghui Futures Co. said in a research note.

Recovering demand for soymeal on the back of record pig prices and demand for animal feed has restored investor confidence in soy, despite an oversupply of imported beans in the country's ports and the government's price caps on edible oils, analysts said.

The January soymeal contract climbed 0.79% to RMB3,325 (US$514)/tonne. Soyoil, palm oil and rapeseed oil futures dropped less than 1%.

Meanwhile, the January corn contract on the Dalian Commodity Exchange rose 0.3% to RMB2,359 (US$364)/tonne.

Crude oil rebounded from sharp overnight losses, with New York Mercantile Exchange light, sweet crude for August delivery rising above US$92 a barrel in early Asian trading before giving up some of the intraday gains.

The January wheat contract traded on the Zhengzhou Commodity Exchange ended 0.39% higher at RMB2,809 (US$434)/tonne, while early rice futures for September delivery edged up 0.36% to RMB2,507 (US$387)/tonne.

China's benchmark Shanghai Composite Index ended at 2,746.21 points, up 2.2% for the biggest daily rise in percentage terms since mid-February.