July 4, 2006

 

Tuesday: China soybean futures settle lower; imports, other markets

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday, despite overnight gains in Chicago Board of Trade soybean futures.

 

Local soy futures were fundamentally weaker than CBOT, given the stockpiled imports, and the profit-taking mood in other commodities in the session also weighed on market, said analysts.

 

The benchmark September contract fell RMB14 to settle at RMB2,589 a metric tonne, after trading between RMB2,582/tonne and RMB2,601/tonne.

 

Total trading volume for all soybean contracts fell to 17,098 lots from 26,556 lots Monday.

 

One lot equals 10 tonnes.

 

No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled higher.

 

The benchmark September contract rose RMB6 to settle at RMB2,521/tonne.

 

"Local traders have already factored in the weather impact, but only found we'd been ahead of the actual condition, so soy futures now lack the momentum to gain further," said Gao Yanrong, Dalu Futures Co.'s analyst.

 

Although there is no official statistics telling how local feed demand has been influenced by bird-flu outbreaks since the end of last year, analysts said it had fallen by 10%-30%, depending on the location.

 

"A few months from now on, the chance for a bird-flu outbreak will rise again. Some market participants have begun to wonder whether feed consumption will see substantial rise this year," Gao said.

 

Soymeal and soyoil futures settled mostly lower, in step with soybean futures.

 

The benchmark November 2006 soymeal contract fell RMB10 to settle at RMB2,327/tonne, after trading between RMB2,316/tonne and RMB2,339/tonne.

 

Total trading volume for all soymeal contracts rose to 280,526 lots from 235,748 lots Monday.

 

The most widely held September 2006 contract settled RMB29 lower at RMB5,195/tonne.

 

Corn futures settled mostly down. The benchmark March 2007 contract fell RMB7 to settle at RMB1,475/tonne.

 

"Corn is still mainly used to produce animal feed, despite its increasing use in ethanol," Gao said. "So, if soy remains weak, it's not good news for corn."