July 18, 2008

 

Friday: China soybean futures settle sharply down on supply pressure

 

 

China's soybean futures traded on the Dalian Commodity Exchange settled sharply lower Friday, tracking a fall on the Chicago Board of Trade overnight.

 

The tumble in crude oil prices overnight, the possibility of a rise in Argentine supply and the high level of stocks at Chinese ports all contributed to the decline, said analysts.

 

The benchmark January 2009 soybean contract settled RMB117 lower at RMB4,860 a metric tonne, or down 2.4%, after trading in the RMB4,825-RMB4,882/tonne range.

 

Although the market is likely to consolidate at current levels for a while before turning bearish, the upward sentiment has been drying up, said Xiao Jun, an analyst at commodity consultancy firm Shanghai JCI.

 

Many market participants have already turned negative on the overall performance outlook for agricultural products.

 

The Argentine Senate voted down a soy export tax Thursday, which will likely end the farmers' conflict with the government and put the country back into the world soybean export market.

 

More soybean supply from Argentina and possible good weather in the run-up to the harvest in September both set a gloomy tone for the market.

 

Meanwhile, the Chinese government's price control measure has been effective, leaving domestic agricultural product prices largely stable compared with global prices, said Dong Shuangwei, an analyst at Capital Futures.

 

China's consumer price index rose 7.1% in June on year, slower than the 8.7% increase in February, which was near a 12-year high, and also below the 7.7% rise in May, official data issued Thursday showed.

 

Soybean oil, palm oil, soybean meal and corn futures all settled lower.

 

A trader with a big feedmeal company said the company has suspended the purchase of cash soy meal due to weak demand.

 

High imported soybean arrivals boosted soy meal stocks at processing plants, but demand hasn't been picking up effectively, he said.

 

Friday's settlement prices in yuan a metric tonne and volume for all contracts in lots (one lot is equivalent to 10 tonnes):

 

Contract          Settlement          Price          Change          Volume

Soybean           Jan 2009          4,860           Dn 117           601,004

Corn                 Jan 2009         1,899            Dn  10           314,812

Soymeal           Jan 2009          3,901           Dn  80           604,574

Palm Oil           Sep 2008        10,060           Dn 308            18,998

Soyoil               Jan 2009        11,246           Dn 264          167,464