July 2, 2007

 

Monday: China soybean futures settle up on CBOT gains; corn down a tad

 

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Monday, tracking strong gains in the Chicago Board of Trade soybean futures Friday.

 

The benchmark January 2008 soybean contract gained RMB94 to settle at RMB3,323 a metric tonne.

 

Total trading volume rose to 354,652 lots from 117,306 lots Friday. One lot is equivalent to 10 tonnes.

 

"The smaller USDA acreage forecast drove up CBOT soy futures Friday, so the sentiment here is also boosted," said Zeng Xuezhou, an analyst with Beite Futures Co.

 

USDA reported 2007 soybean acreage at 64.081 million acres, down 15% from 2006's record high and the lowest planted area since 1995.

 

The U.S. is among the top exporters of soybean to China.

 

Although domestic fundamentals, including a large amount of stocks and weak domestic feedmeal demand, are weighing on prices, the gains on CBOT for soybean kept shorts on the sidelines, analysts said.

 

Speculative longs seem to be in favor of CBOT soy futures, and are very sensitive to positive news; "if it continues to be the case, we're likely to see more gains," said Zeng.

 

Soymeal futures and soyoil futures settled mostly higher, along with soybean.

 

The most heavily traded January 2008 soymeal contract settled RMB90 higher at RMB2,650/tonne, while the benchmark September 2007 soyoil contract settled RMB210 higher at RMB7,882/tonne.

 

Corn futures settled lower slightly, with the benchmark January 2008 contract fell RMB7 to settle at RMB1,564/tonne.

 

Trading volume for all corn contracts fell to 383,834 lots from 401,762 lots Friday.

 

With market participants now becoming increasingly optimistic about soybean, the correlation between soy and corn prices will limit the downside for corn, despite the forecast of higher acreage, said a trader based in Beijing.

 

"After all, the demand for corn is generally strong on feedmeal demand and industrial uses," he said.