August 10, 2006

 

Thursday: China soybean futures settle down amid cautious sentiment

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled lower Thursday, amid cautious sentiment.

 

The benchmark September contract settled RMB4 lower at RMB2,389 a metric tonne, after trading between RMB2,385/tonne and RMB2,396/tonne.

 

Total trading volume rose to 41,974 lots from 36,946 lots Wednesday. One lot is equivalent to 10 tonnes.

 

"Trading volume was relatively thin as investors were pretty cautious before the issue of monthly report on supply and demand by the U.S. Department of Agriculture tomorrow," said Liu Xinghua, an analyst at Great Wall Futures Co.

 

"And the persistent oversupply situation continues to weigh on soybean futures prices," he added.

 

No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mostly higher. Nevertheless, the benchmark September contract fell RMB3 to RMB2,453/tonne.

 

Soymeal futures settled lower. The most active January 2007 soymeal contract fell RMB3 to settle at RMB2,243/tonne, after trading between RMB2,238/tonne and RMB2,255/tonne.

 

Total trading volume for all soymeal contracts fell to 132,514 lots from 152,846 lots Wednesday.

 

"Prices for pork and poultry were seen increasing recently. However, demand for feed did not rise by a large margin. Moreover, large import arrivals of soybeans are still stockpiled at major ports, contributing to the oversupply situation," Liu added.

 

Soyoil futures settled higher. The benchmark November 2006 soyoil contract rose RMB44 to settle at RMB5,622/tonne.

 

"Demand for soyoil is increasing in the E.U. as it's used to produce biofuel. People in Southeast Asia are seeking to make biomass oil with palm oil, which pushes up soyoil prices as well. In addition, (Chinese) national holidays are on the horizon, when demand for edible oil is supposed to rise," Liu added.

 

Corn futures settled mostly lower. The most widely held May 2007 contract settled at RMB1,384/tonne, down RMB4.

 

"Demand from corn processing industry keeps increasing. However, China may control the development of ethanol companies using corn as the main raw material in a bid to ensure supply of grains," Liu said.

 

Total trading volume for corn rose to 430,416 lots from 202,224 lots Wednesday.