September 1, 2006

 

Friday: China soybean futures settle higher on improved demand

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled higher Friday on improved domestic demand.

 

The most active January 2007 contract settled RMB12 higher at RMB2,555 a metric tonne, after trading between RMB2,550/tonne and RMB2,559/tonne.

 

Total trading volume fell to 14,642 lots from 16,178 lots Thursday. One lot is equivalent to 10 tonnes.

 

"Soybean futures extended gains today in line with increases in spot market prices lately, due to a rise in demand," said Liu Xinghua, an analyst at Great Wall Futures Co.

 

"Future prices are still holding at a low level. Today's rebound was supported by fresh buying and short-covering," Zhang Yifan, an analyst at China Grains & Oils Group Feed Corp, said.

 

No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mostly higher. The benchmark September contract settled at RMB2,516/tonne, up RMB42.

 

Soymeal futures settled mostly higher. The benchmark January 2007 contract rose RMB8 to settle at RMB2,251/tonne, after trading between RMB2,247/tonne and RMB2,256/tonne.

 

Total trading volume for soymeal dropped to 114,642 lots from 117,818 lots Thursday.

 

"Thanks to a recovery in demand for feed, soymeal prices on the spot market continued to pick up this week, offering support to soymeal futures," Liu said.

 

Soyoil settled mostly higher. The most widely held January 2007 contract rose RMB56 to settle at RMB5,613/tonne.

 

"Demand for soyoil is increasing as the National Day and mid-autumn festival, one of the most important traditional festivals in China, are only one month away," Liu said.

 

Zhang agreed with Liu, adding, "Demand for soyoil may rise in the winter as the consumption of palm oil usually goes down when the weather gets cold."

 

Corn futures settled mostly up. The benchmark May 2007 contract settled at RMB1,402/tonne, up RMB8.

 

Total trading volume for corn fell to 325,786 lots from 440,534 lots Thursday.

 

"Corn futures gained, supported by spot prices, which picked up moderately this week. Moreover, investors feel there should be a major recovery in demand for feed in the fall, contributing to the bullish market sentiment," Liu said.

 

"It's widely expected that the fall harvest of corn will be good. However, corn output could drop significantly if there are unfavorable weather conditions such as frost or rain storms in the autumn," Zhang added.