September 3, 2007

 

Monday: China soybean futures settle up on output reduction forecast

 

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Monday, supported by expectations that domestic soybean output will decline further on forecasts of early frost.

 

The benchmark May 2008 soybean contract settled RMB18 higher at RMB3,797 a metric tonne.

 

Total trading volume declined to 325,940 lots from 430,664 lots Friday. One lot is equivalent to 10 tonnes.

 

There are concerns of early frost in the major northeastern soybean producing regions in the first half of September, which may add pressure to the drought-hit soybean output, said Li Shuai, a trader at Chinatex Grains & Oils Import & Export Corp.

 

Although some soybean processing companies have ample stocks ahead of the harvest season, they continue to purchase domestic soybeans despite high prices, because they expect soybean output to decline this year.

 

Other soybean processing companies even plan to stop production due to high soybean prices, traders said.

 

High freight rates also helped support imported soybean prices at high levels.

 

Soymeal futures and soyoil futures settled lower.

 

The benchmark May 2008 soymeal contract settled RMB4 lower at RMB3,019/tonne, and the benchmark January 2008 soyoil contract settled RMB52 lower at RMB8,030/tonne.

 

Soymeal prices are at high levels, and have little room for upside, Li said.

 

Corn futures settled higher.

 

The benchmark May 2008 contract settled RMB9 higher at RMB1,637/tonne, and trading volume for all corn contracts declined to 505,434 lots from 658,352 lots Friday.