August 5, 2009
Wednesday: China soy futures settle up; government sells crop from reserves
China's soy futures traded on the Dalian Commodity Exchange settled higher Wednesday amid overall bullish sentiment for commodities across the board.
The benchmark May 2010 soy contract settled RMB13 a metric tonne higher, or 0.3%, at RMB3,733/tonne.
Commodity prices in China have risen recently on the dollar's weakness and expectations that inflation may accelerate following ample liquidity in the market, said analysts.
China may be in the early stages of a big asset-price inflation cycle, "and this cycle has quite a way to run before it gets to the stage where Beijing will feel compelled to intervene in a dramatic way," Andy Rothman, CLSA China macro strategist, told the Wall Street Journal earlier.
The government finally managed to sell some soy from its reserves in major producing areas in auctions Wednesday, after the weekly sales failed twice consecutively earlier due to high prices.
So far it has sold more than 4,000 tonnes, and the auctions are still going on.
The recent rise in global soy prices have made it possible for the government to sell the crop at rates higher than those prevailing in the market, said Xiao Jun, an analyst with commodities consultancy firm Shanghai JCI.
"It showed that some processing plants expect prices to rise later," said Yu Haifeng, an analyst with Tianqi Futures.
Still, analysts said the sales result has had limited impact on the market as the volume is too low.
The trading volume of all soy contracts declined to 273,028 lots from 417,230 lots Tuesday.
The open interest fell 28,756 lots to 243,256 lots Wednesday.
Corn futures settled little changed, while soymeal, palm oil and soyoil futures settled higher.
Wednesday's settlement prices in yuan a metric 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 3,733 Up 13 273,028
Corn May 2010 1,671 Up 1 83,120
Soymeal May 2010 3,002 Up 21 2,250,300
Palm Oil May 2010 6,458 Up 32 600,776
Soyoil May 2010 7,648 Up 70 1,048,228
