August 3, 2006

 

Thursday: China soybean futures settle higher, output may decline

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled mostly higher as domestic soybean output may drop this year, an analyst said.

 

In July, the China National Grain & Oils Information Center said domestic soybean output in 2006 may fall 2.9% to around 15.9 million metric tonnes.

 

The benchmark September contract settled RMB15 higher at RMB2,415/tonne, after trading between RMB2,404 and RMB2,429/tonne.

 

Total trading volume fell to 73,062 lots from 96,532 lots Wednesday. One lot is equivalent to 10 tonnes.

 

"Soybean futures gained on expectation that soybean output would probably decline by a large margin this year. In addition, many short-sellers pulled out as current prices were holding at a very low level," said Li Honglei, an analyst at Nanhua Futures Co.

 

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

 

The benchmark September contract settled at RMB2,446/tonne, up RMB1.

 

Soymeal futures settled lower. The most active January 2007 soymeal contract fell RMB14 to settle at RMB2,271/tonne, after trading between RMB2,257 and RMB2,291/tonne.

 

Total trading volume for all soymeal contracts rose to 276,988 lots, from 191,610 lots Wednesday.

 

"Demand for soymeal has begun to pick up as livestock farmers are increasing production for National Day holidays and Spring Festival. However, soymeal prices remained low due to the overstocking that overwhelmed the increase in demand," Li said.

 

Soyoil futures settled mostly down. The benchmark November 2006 soyoil contract dropped RMB11 to settle at RMB5,593/tonne.

 

"Soyoil futures prices will not drop too much as demand is stable. Furthermore, imports of palm oil declined, providing support to soyoil prices," Li added.

 

Corn futures settled lower. The most widely held May 2007 contract settled at RMB1,403/tonne, down RMB10.

 

"Corn output is expected to rise considerably because of increased acreage, putting pressure on corn futures prices," Li said.

 

Total trading volume for corn rose to 408,652 lots from 229,726 lots Wednesday.