June 28, 2011

 

 

Soy futures on the Dalian Commodity Exchange (DCE) ended lower Monday (Jun 27) amid broad losses led by cotton and rubber, as the dollar rose in response to investors' concerns about Greece's debt crisis.

 

The benchmark January soy contract settled 0.3% lower at RMB4,395 (US$679)/tonne.

 

Benchmark rubber and cotton contracts on the Shanghai Futures Exchange and Zhengzhou Commodity Exchange, respectively, led settlement losses of around 3% each.

 

Greek lawmakers will vote Wednesday on a US$39.8-billion austerity plan. German Finance Minister Wolfgang Schaeuble warned Sunday that Greece will not receive its next tranche of international aid unless the plan is approved, prompting investors to pull out of risky assets, turning to the greenback as a safe haven.

 

Chinese Premier Wen Jiabao said Monday that it will be hard to keep China's inflation rate under 4% this year, but it is possible to cap it below 5%. In a commentary on Friday, Wen said efforts to curb inflation have worked, with price gains now back within a controllable range.

 

Wen's remarks affected sentiment and add to pressure on the commodities market, analysts said, as soaring food prices are believed to be a major contributor to the high inflation.

 

Soy's losses have been limited, however, as the market expects this year's domestic output to fall sharply as a result of sharply-reduced acreage. The underlying assets for DCE No. 1 soy contracts are domestically grown, genetically unmodified soy.

 

China is still oversupplied, and remains the world's top soy importer, with port inventories continuing to increase while consumption of edible oil is lower in the off season, according to the state-owned China National Grain & Oils Information Centre.

 

However, recovering soymeal demand is likely to support soy prices and reduce port stocks, analysts said.

 

Meanwhile, China plans to sell 300,000 tonnes of state soy reserves in an auction in Anhui Province on June 28, sources reported.

 

The reserves include 280,000 tonnes from Hebei province and 20,000 tonnes from Shandong province.