August 28, 2006

 

Monday: China soybean futures settle lower CBOT losses

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled lower Monday, in line with Friday's losses on the Chicago Board of Trade, analysts said.

 

The most active January 2007 contract settled RMB16 lower at RMB2,536 a metric tonne, after trading between RMB2,532 and RMB2,541/tonne.

 

Total trading volume fell to 11,956 lots from 12,504 lots Friday. One lot is equivalent to 10 tonnes.

 

"Soybean futures dropped, mainly pressured by the worst CBOT retreat witnessed over the past few weeks," said Zhang Xiaofan, an analyst at China Grains & Oils Group Feed Corp.

 

Shi Junfeng, an analyst at Tianma Futures Co., agreed with Zhang, adding that trading volume shrank further as market sentiment turned more cautious.

 

No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mixed. The benchmark September contract rose RMB13 to RMB2,479/tonne.

 

Soymeal settled lower. The benchmark January 2007 soymeal contract fell RMB14 to settle at RMB2,242/tonne, after trading between RMB2,237 and RMB2,249/tonne.

 

Total trading volume for soymeal fell to 102,622 lots from 105,344 lots Friday.

 

"Spot market prices increased in China's northeast but were mostly unchanged in the south, which is the largest consumer area for soymeal. Therefore, nationwide, price increases were moderate," Zhang said

 

"It's very likely that the soybean harvest in the U.S. will be good this year, indicating a decline in prices for imported soybeans, which will put pressure on soybean and soymeal futures," he added.

 

Soyoil settled mostly higher. The most widely held November 2006 soyoil contract rose RMB24 to settle at RMB5,481/tonne.

 

"It's an upward correction after the retreat Friday. However, room for further gains is limited, as demand for soyoil is not as strong as expected, plus there are pressures from large import arrivals of palm oil," Shi said, referring to the large volume of imported palm oil during July and August.

 

Corn futures settled lower. The benchmark May 2007 contract settled RMB3 lower at RMB1,412/tonne.

 

Total trading volume for corn fell to 199,778 lots from 263,526 lots Friday.

 

Nevertheless, Zhang pointed out that the losses could also be attributed to corn's fundamentals.

 

"The new harvest of corn, expected to enter the market in October and November, continues to weigh on corn futures," Zhang said.