August 11, 2009

China's soy futures traded on the Dalian Commodity Exchange settled higher Tuesday, boosted by ample liquidity, even as their Chicago Board of Trade counterparts settled lower overnight.

 

The benchmark May 2010 soy contract settled RMB49 a metric tonne higher, or 1.3%, at RMB3,770/tonne.

 

"It's very difficult for commodities prices to fall amid flush liquidity, as (the government's) attitude is very clear in trying to guarantee an economic growth of 8% (for this year)," said Zeng Xuezhou, an analyst with Beite Futures Co.

 

Therefore, commodity prices will remain high in the second half of this year as long as the government doesn't tighten its monetary policies, he added.

 

Some government-backed funds have been squaring their positions to push soy futures higher to help the government release its large volume of soy reserves at higher prices, analysts said.

 

The government has been selling soy from its reserves since late-July at prices higher than those prevailing in the market, with very little volume being actually sold.

 

Trading volume for all soy contracts rose to 349,190 lots from 228,004 lots Monday.

 

Open interest rose 33,068 lots to 258,808 lots Tuesday.

 

Corn futures, soyoil futures and palm oil futures settled higher, while soymeal futures settled lower.

 

Tuesday'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       3,770        Up   49       349,190

Corn                May 2010      1,670         Up    9         84,954

Soymeal          May 2010       2,966        Dn    3     2,012,364

Palm Oil           May 2010       6,588        Up   20       874,560

Soyoil              May 2010       7,608        Up   40       960,782