August 25, 2006

 

Friday: China soybean futures settle lower on oversupply

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled Lower Friday on oversupply, said analysts.

 

The most active January 2007 contract settled RMB9 lower at RMB2,552 a metric tonne, after trading between RMB2,547 and RMB2,559/tonne.

 

Total trading volume fell to 12,504 lots from 12,692 lots Thursday. One lot is equivalent to 10 tonnes.

 

"Soybean's weak fundamentals continued to weigh on futures prices," said Zhang Xiaofan, an analyst at China Grains & Oils Group Feed Corp.

 

Nevertheless, Zeng Xuezhou, an analyst at Beite Futures Co., forecasted a rebound next week.

 

"Soybean prices rose considerably in the spot market, in step with soymeal prices, which is expected to provide support to futures next week," Zeng said.

 

No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mixed. The benchmark September contract was unchanged at RMB2,466/tonne.

 

Soymeal settled lower. The benchmark January 2007 soymeal contract fell RMB10 to settle at RMB2,256/tonne, after trading between RMB2,252 and RMB2,262/tonne.

 

Total trading volume for soymeal fell to 105,344 lots from 139,762 lots Thursday.

 

"Rises in prices for pork and poultry have not led to a recovery in demand for soymeal," Zhang said.

 

However, Zeng believed that increased spot market prices would help futures prices.

 

"Increases in prices for imported soybeans will push up soymeal prices in the spot market, which will eventually support the futures," Zeng said.

 

Soyoil settled mostly lower. The most widely held November 2006 soyoil contract fell RMB14 to settle at RMB5,457/tonne.

 

"Soyoil futures prices are holding relatively stable at the current level, with small but frequent fluctuations. A moderate rebound is expected next week, as demand will rise with the National Day holidays in October on the horizon," Zeng said.

 

Corn futures settled lower. The benchmark May 2007 contract settled RMB4 lower at RMB1,415/tonne.

 

Total trading volume for corn fell to 263,526 lots from 411,858 lots Thursday.

 

"Futures prices fell a little bit today, pressured by the expectation that the new harvest of corn will still be good despite the recent drought," Zhang said.

 

Zeng felt that corn futures prices had consolidated in the past two days and would look up next week.

 

"Corn processing companies will make considerably large purchases to build up their stocks, which are usually small around this time of the year," Zeng said.