August 18, 2006

 

Friday: China soybean futures settle up on higher freight costs

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled higher Friday on increased freight costs, which pushed up prices of imported soybeans, analysts said.

 

The most active January 2007 contract settled RMB25 higher at RMB2,560 a metric tonne, after trading between RMB2,540 and RMB2,577/tonne.

 

Total trading volume rose to 34,484 lots from 27,448 lots Thursday. One lot is equivalent to 10 tonnes.

 

"Prices of imported soybeans are expected to rise to RMB2,700/tonne next month, as a result of increases in freight costs, lending support to soybean futures," said Shi Junfeng, an analyst at Tianma Futures Co.

 

However, room for further gains in soybean futures is limited, according to analysts.

 

"The volume of soybean stocks is still large and will weigh on futures prices," said Li Honglei, an analyst at Nanhua Futures Co.

 

No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mostly higher. The benchmark September contract rose RMB11 to RMB2,466/tonne.

 

Soymeal settled higher. The benchmark January 2007 soymeal contract rose RMB28 to settle at RMB2,263/tonne, after trading between RMB2,240 and RMB2,273/tonne.

 

Total trading volume for soymeal rose to 234,874 lots from 160,894 lots Thursday.

 

"In addition to the higher prices for imported soybeans, which have increased local crushers' production costs, a recovery in demand due to increases in prices for pork and poultry also lent support to soymeal futures," Shi said.

 

Soyoil settled mostly lower. The most widely held November 2006 soyoil contract fell RMB24 to settle at RMB5,458/tonne.

 

"Soyoil futures dropped, pressured by the overnight retreat in crude oil prices," Li said.

 

"Recent losses could be seen as a downward correction, as soyoil futures are still holding at a high level," said Shi.

 

Corn futures settled higher. The benchmark May 2007 contract settled up RMB17 at RMB1,422/tonne.

 

Total trading volume for corn rose to 599,778 lots from 471,718 lots Thursday.

 

"The market's confidence in corn futures has increased as the worst drought in 50 years has hit China's southwest, where corn output is expected to decline this year," Li added.