August 7, 2009
Soy futures traded on the Dalian Commodity Exchange settled lower Friday as the market lacked favorable fundamentals to support recent gains.
The benchmark May 2010 soy contract settled RMB32 a metric tonne lower at RMB3,667/tonne.
China's commodities market has been under pressure after the country's central bank said late Wednesday it will "fine-tune" domestic policies based on the economic situation and on changes in prices.
But although the comment provided no clear tightening signal, it led to a shift in the bullish market sentiment due to concern that liquidity wouldn't be as ample in the second half, said Yuan Jianbin, an analyst with Guangfa Futures.
Funds were cutting their positions and taking profits as there are no concrete favorable fundamentals to support the recent big rise in agricultural commodity prices, he added.
Meanwhile, large volume of soy from government reserves continued to pressure the market, though very little of the crop has been released to the market during weekly sales.
Analysts said domestic soy traders are waiting for more clear guidance from the Chicago Board of Trade to buy in, as there's potential for the CBOT to rise on a possible cut in the unit yields estimate by the U.S. Department of Agriculture.
Trading volume for all soy contracts declined to 126,796 lots from 184,902 lots Thursday.
Open interest fell 8,546 lots to 225,644 lots.
Corn futures, soymeal futures and soyoil futures settled lower, while palm oil futures settled higher.
Friday'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 3,667 Dn 32 126,796
Corn May 2010 1,657 Dn 9 92,330
Soymeal May 2010 2,927 Dn 6 2,233,702
Palm Oil May 2010 6,400 Up 34 994,386
Soyoil May 2010 7,456 Dn 70 1,005,042
