July 24, 2009
Friday: China soy futures settle down; high local supply weighs
China's soy futures traded on the Dalian Commodity Exchange settled lower Friday, plagued by ample domestic supply.
The benchmark May 2010 soy contract settled RMB22 lower at RMB3,530 a metric tonne, or down 0.6%.
China plans to sell more soy from its reserves next week, after failing to sell any of the planned 500,000 tonnes soy this week.
"As long as the reserves are not released, there will be pressure on the market," said Yu Haifeng, an analyst with Tianqi Futures.
The government will sell 500,000 tonnes of soy and 2 million tonnes of corn in major producing areas in the northeast, the same as what it offered this week, according to an official statement on China National Grain and Oils Information Center's Web site.
Traders and analysts expect the base prices at the auction to remain at this week's level of RMB1,550/tonne for corn and RMB3,750/tonne for soy.
However, they expect soy sales to fail again if the government doesn't change the base price, which is higher than market prices.
But some said the government may give subsidies to soy processing plants to ensure it is able to release stocks from the reserves at such high prices.
The trading volume of all soy contracts declined to 221,738 lots from 266,122 lots Thursday.
The open interest rose 13,890 lots to 390,586 lots Friday.
Corn futures settled unchanged, soymeal futures settled a tad up, while palm oil and soyoil futures settled lower.
Friday's settlement prices in yuan a tonne for benchmark contracts and volume for all contracts in lots (one lot is equivalent to 10 tonnes):
Contract Settlement Price Change Volume
Soy May 2010 3,530 Dn 22 221,738
Corn Jan 2010 1,620 Unch 48,312
Soymeal Jan 2010 2,843 Up 1 1,174,810
Palm Oil Jan 2010 5,704 Dn 44 491,426
Soyoil Jan 2010 7,098 Dn 34 617,004
