July 3, 2009
Friday: China soy futures down on supply concerns; technical decline
Soy futures headed lower on the Dalian Commodity Exchange Friday on thin trade, as supply concerns built up on the back of a technical pull-back amid softening oil prices.
The benchmark January 2010 soy contract settled 1% lower at RMB3,657 a metric tonne.
"Market chatter is growing about the government getting ready to sell down some of its stockpile," said Tu Xuan, an analyst with Shanghai JC Intelligence.
The government ceased its soy stockpiling program at the end of June, as scheduled, Tu added.
Now, the market's attention is turning to when and how the government might release its stocks, though no firm details have emerged, she said.
The external market also dragged on soy prices, said Wang Xiaoguang of Galaxy Futures.
"Corn and wheat prices fell sharply earlier this week on the Chicago Board of Trade, and oil prices have been weakening. These are not good developments for soy."
Chicago Board of Trade soy futures retreated Thursday under pressure from pre-holiday weekend positioning and broad-based weakness in commodity and financial markets.
Despite a price bounce Wednesday after the U.S. Department of Agriculture's annual acreage report, market participants are now factoring in the supply implications of the department's finding that U.S. 2009 planted area for soy would reach a record high of 77.5 million acres.
"That's putting longer-term pressure on prices," Tu said.
The market expects to look for direction next from Chinese trade appetites.
"A key near-term price driver for soy is likely to be any slackening in the pace of Chinese imports as well as any release of Chinese stockpiles, which will temporarily weigh on prices," Barclays Capital said in a note Friday.
Corn, soy meal, palm oil and soy oil futures fell 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 3,657 Dn 40 135,138
Corn Jan 2010 1,623 Dn 8 72,758
Soy Meal Jan 2010 2,938 Dn 30 2,262,594
Palm Oil Jan 2010 5,866 Dn 196 742,918
Soy Oil Jan 2010 7,244 Dn 190 1,366,868
