Thursday: China soy futures settle tad up; take cue from CBOT rally

 

 

Soy futures inched up on the Dalian Commodity Exchange Thursday, recovering from a sharp decline across the commodities complex a day earlier, as investors took their cue from more stable equity markets and a tentative rally on the Chicago Board of Trade.

 

The benchmark May 2010 soy contract gained 0.1% to settle at RMB3,625 a metric tonne.

 

"Yesterday it had the feeling of a panic, but the market now thinks there was an overcorrection," said Lin Xinghua of Great Wall Futures. "Now people are looking to CBOT for direction."

 

Chicago soy futures rebounded from an early slump Wednesday as crude oil rallied for a second consecutive day.

 

"CBOT looks like it is tending to strength, and we expect soy prices to stay stable," Lin said.

 

A drought in China's northern and northeastern regions is also a potential threat to output, lending support to prices.

 

Some 2 million tonnes of soy and 20 million tonnes of corn could be lost if the drought persists, Lin said. Harvesting begins in the fall.

 

"But it's too early to tell if the drought would definitely affect crops," he said.

 

Chinese demand has stayed strong, with import levels expected to stay stable, Lin said.

 

The U.S. Department of Agriculture Wednesday announced another soy sale to China - for 2009-2010 delivery of 205,000 tonnes, AgriCharts said Thursday.

 

"That brings total sales announcements to 498,000 tonnes (18.3 million bushels) this week so far," AgriCharts said. "China had already purchased 237 million bushels of soy (6.5 million tonnes) for the 2009-2010 marketing year (which begins Sept. 1) as of Aug. 6, the last weekly reporting date."

 

Corn, soymeal, palm oil and soyoil futures all made small gains Thursday.

 

Thursday'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      3,625         Up        5         185,484

Corn        May 2010      1,705          Up       2          346,794

Soymeal   May 2010      2,813         Up        7        1,512,716

Palm Oil   May 2010      6,352          Up       46        948,590

Soyoil      May 2010      7,394          Up       20        940,626