June 29, 2007

 

Friday: China soybean futures settle higher on technical rebound

 

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Friday on a technical rebound but may resume their fall after consolidation.

 

The benchmark January 2008 soybean contract settled RMB17 higher at RMB3,229 a metric tonne.

 

Total trading volume fell to 117,306 lots from 153,760 lots Thursday. One lot is equivalent to 10 tonnes.

 

"The (first round of the) fall has come to an end, but soybean futures are likely to fall further on the government's tightening policies," said Wang Xiaoguang, an analyst at Galaxy Futures.

 

China's inflation rate has crept up in recent months on rising food prices, which make up about one-third of the Consumer Price Index. The latest monthly CPI reading was 3.4% for May.

 

The government is trying to curb the fast growth in prices of agricultural products, especially corn and soybeans.

 

Meanwhile, the U.S. Department of Agriculture is scheduled to release its annual acreage and quarterly grain stock reports Friday at 8:30 a.m. EDT. The average of 20 analysts' estimates pegged 2007 soybean acreage at 67.838 million acres, up from the prospective planting figure of 67.140 million.

 

Soymeal futures and soyoil futures settled mostly higher, tracking the gains in soybeans.

 

The most heavily traded January 2008 soymeal contract settled RMB11 higher at RMB2,560/tonne, while the benchmark September 2007 soyoil contract settled RMB84 higher at RMB7,672/tonne.

 

Corn futures also settled higher on a technical rebound.

 

The benchmark January 2008 contract settled RMB10 higher at RMB1,571/tonne.

 

However, corn contract prices are likely to decline further due to growing corn acreage and falling demand, said traders.

 

The high corn prices have curbed the crop's industrial demand, while China has switched its strategy from grain-based to non-grain-based ethanol fuel.

 

Trading volume for all corn contracts fell to 401,762 lots from 534,348 lots Thursday.