August 25, 2009

 

Tuesday: China soy futures settle tad up; equities hurt sentiment

 

 

Soy futures traded on the Dalian Commodity Exchange settled only a tad higher Tuesday, despite a rally in Chicago Board of Trade counterparts overnight, due to losses in Chinese equities.

 

The benchmark May 2010 soy contract settled RMB10 a tonne higher at RMB3,721/tonne, or up 0.3%.

 

The contract rose in early trading, supported by a 3.5% gain in November soy futures on the CBOT last night, but edged lower during the session as the Shanghai Composite Index tumbled as much as 5.6% due to concerns about a possible tightening of credit and the economic outlook.

 

The index recovered some of its losses before the closing bell, ending down 2.6%, and that helped soy futures to climb back into positive territory in the last 30 minutes of trading.

 

"Commodities have tracked the equities market strongly recently, and the upward correction in earlier months is like the end of a spear," said Hu Kai, an analyst with Dalu Futures Co, indicating that the rally in equities and commodities has likely come to an end.

 

China's economic growth in the first half was mostly due to cash liquidity from loose monetary policies and stimulus spending, rather than the real demand needed to support a lasting rise in commodities prices, analysts said.

 

Meanwhile, if crude oil can't move up past recent resistance, agricultural products are unlikely to see a breakthrough either, they said.

 

Trading volume of all soy contracts rose to 340,896 lots from 253,250 lots Monday.

 

Open interest rose 7,674 lots to 307,150 lots Tuesday.

 

Corn futures settled little changed, while soymeal futures, soyoil futures and palm oil futures all settled lower.

 

Following are Tuesday's settlement prices in yuan a 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             3,721               Up   10            340,896

Corn                   May 2010             1,740               Dn    1           283,526

Soymeal             May 2010             2,904               Dn    6         1,303,508

Palm Oil              May 2010             6,510               Dn   22           640,262

Soyoil                 May 2010             7,540               Dn   24           705,854