Wednesday: China soy futures settle down, track overall commodity fall

 

 

Soy futures traded on the Dalian Commodity Exchange settled lower Wednesday, tracking an overall fall in commodities and overnight fall in crude oil.

 

The benchmark May 2010 soy contract settled RMB73 lower at RMB3,598 a metric tonne, or down 2.0%.

 

A fall in soy on the Chicago Board of Trade and decline in crude oil prices overnight, as well as an overall fall in local commodities during the session added pressure to already bearish sentiment due to liquidity concerns.

 

The recent rise in commodities was mostly boosted by ample liquidity, and once traders are concerned about liquidity, the market is sure to fall, said Huang Xiao, a manager at Capital Futures.

 

Meanwhile, fundamentals for agricultural products are negative to prices, as the U.S. is expected to see a good soy harvest this year, he added.

 

There have been concerns over the government's moderate tightening of lending by banks after the central bank said it would "fine-tune" its monetary policies, which have boosted the asset bubble in the country's financial markets.

 

However, Premier Wen Jiabao said Tuesday during a meeting with World Bank President Robert Zoellick that China won't alter the direction of its economic policy.

 

Wen said China will continue to pursue an active fiscal policy and moderately loose monetary policy, according to Xinhua News Agency.

 

"Even though the Chinese authorities try to control the speculative consequences of the stimulus plan, their number one target remains to support economic growth," said Calyon in a research note issued Wednesday, adding this should limit the scope of possible monetary tightening in the coming months.

 

Trading volume for all soy contracts rose to 185,922 lots from 97,244 lots Tuesday.

 

Open interest fell 700 lots to 287,744 lots.

 

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

 

Wednesday's settlement prices in yuan a metric 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      3,598        Dn    73          185,922

Corn        May 2010      1,742       Dn     14         349,072

Soymeal  May 2010      2,794        Dn    87        1,621,676

Palm Oil   May 2010      6,092       Dn    162        422,016

Soyoil      May 2010      7,178       Dn    184        774,174