August 14, 2009

Soy futures traded on the Dalian Commodity Exchange settled lower Friday, along with declines in China's stock markets amid concerns that adjustments in monetary policy expected later this year could reduce cash liquidity.

 

The benchmark May 2010 soy contract settled RMB56 a metric tonne lower at RMB3,785/tonne, or down 1.5%.

 

The benchmark Shanghai Composite Index fell 93.59 points Friday, or 3.0%, to end at 3046.97, the lowest close since July 1. The Shenzhen Composite Index fell 3.6% to 1022.92.

 

Recent surges in commodities prices were due mainly to flush cash liquidity, but there are persistent concerns that fine-tuning of monetary policy likely later this year may be more strong than expected, said analysts.

 

Banks are already tightening their lending, as can be seen in the recent yuan loans data, analysts said. New yuan loans fell sharply to RMB355.9 billion in July from RMB1.53 trillion in June.

 

"The market was too crazy and the government is trying to warn it," said Gao Yanrong, an analyst with Dalu Futures Co.

 

However, overall sentiment is still bullish and traders have just stayed on the sidelines during the downward correction, Gao said.

 

Trading volume of all soy contracts declined to 231,282 lots from 307,514 lots Thursday.

 

Open interest fell 2,634 lots to 269,958 lots Friday.

 

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

 

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       3,785        Dn   56       231,282

Corn           May 2010      1,718         Up    3       856,948

Soymeal     May 2010       2,958        Dn   59    1,955,588

Palm Oil      May 2010       6,588        Dn  102      788,092

Soyoil         May 2010       7,670        Dn  104      951,922