July 29, 2008

 

Tuesday: China soybean futures settle down sharply amid weak sentiment

 

 

China's soybean futures traded on the Dalian Commodity Exchange settled sharply lower on bearish sentiment, despite a slight rise at the Chicago Board Of Trade overnight.

 

The benchmark January 2009 soybean contract settled RMB114, or 2.5%, lower at RMB4,519 a metric tonne after trading between RMB4,446 and RMB4,603/tonne.

 

Expected increased global oilseed output, a strengthening dollar and weakening crude oil prices all plagued the market.

 

"Market (sentiment) is very fragile. If there is no solid positive news (to support prices), a further fall is very likely," said Cui Ruijuan, an analyst at Guangfa Futures.

 

Soyoil futures and palm oil futures tumbled, with the benchmark September 2008 palm oil contract hitting 5% limit-down at RMB8,774/tonne during the session.

 

Crude palm oil futures on Malaysia's derivatives exchange Monday ended with prices declining to their lowest level for the year on speculative selling and profit-taking, pressuring their counterparts at DCE.

 

The benchmark January 2009 soyoil contract also broke through key psychological support of RMB10,000/tonne, ending at RMB9,966/tonne.

 

Analysts said significant short positions were being built up during the day.

 

Meanwhile, the Chinese government has been increasing its state reserves of soybeans and vegetable oils to enhance its ability to control inflation.

 

Vegetable oil prices are likely to return to levels seen in mid 2007, before the latest surge started, with soyoil prices likely falling to RMB8,000-RMB9,000/tonne, said Xiao Jun, an analyst at commodity consultancy Shanghai JCI.

 

Soymeal futures and corn futures also settled lower.

 

Tuesday'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           4,519          Dn 114        1,091,288

Corn                 Jan 2009           1,861          Dn  20           483,238

Soymeal           Jan 2009           3,723          Dn  64           666,758

Palm Oil           Sep 2008           8,938          Dn 296            20,274

Soyoil               Jan 2009         10,074          Dn 336          347,858