August 22, 2007

 

Tuesday: China soybean futures settle up; rate hike may slow rise

 

 

Most soybean futures traded on the Dalian Commodity Exchange settled slightly higher Wednesday, but analysts said the Chinese central bank's overnight interest rate hikes may help to slow the rise in futures prices of soft commodities.

 

The benchmark May 2008 soybean contract settled RMB4 higher at RMB3,595 a metric tonne.

 

Total trading volume declined to 238,558 lots from 314,688 lots Tuesday. One lot is equivalent to 10 tonnes.

 

The People's Bank of China said late Tuesday it will raise benchmark deposit and lending rates Wednesday as part of its efforts to stabilize inflation expectations and control credit.

 

The rate increase, the fourth this year, came after inflationary pressure and abundant trade- and investment-driven inflows showed no signs of easing in July. This has heightened concerns that the world's fourth-largest economy may overheat.

 

"The rate hike (will) curb the over-rapid increase in food prices, and slow down the too-fast rise in futures prices of agricultural products," said Fang Xiangmin, research manager at Changjiang Futures.

 

Analysts have been expecting domestic prices of soft commodities to rise further, in line with higher inflation.

 

China's consumer price index rose by a decade-high 5.6% in July from a year earlier, due to big increases in food prices.

 

Soymeal futures settled higher but soyoil futures settled lower.

 

The most heavily traded May 2008 soymeal contract settled RMB17 higher at RMB2,881/tonne, and the benchmark January 2008 soyoil contract settled RMB38 lower at RMB7,928/tonne.

 

Corn futures settled mixed.

 

The benchmark May 2008 contract settled unchanged at RMB1,585/tonne.

 

Trading volume for all corn contracts rose to 401,316 lots from 370,070 lots Tuesday.