September 4, 2006

 

Monday: China soybean futures settle down on CBOT losses

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Monday on CBOT's Friday losses, amid cautious market sentiment, analysts said.

 

The most active January 2007 contract settled RMB10 lower at RMB2,545 a metric tonne, after trading between RMB2,542/tonne and RMB2,550/tonne.

 

Total trading volume fell to 13,472 lots from 14,642 lots Friday. One lot is equivalent to 10 tonnes.

 

"Soybean futures prices fell moderately, pressured by CBOT losses Friday," said Li Honglei, an analyst at Nanhua Futures Co.

 

"Futures prices dropped on long liquidation," said Gao Yanrong, an analyst at Dalu Futures Co., adding "trading volume was thin, because investors were pretty cautious, waiting for the new harvest of soybeans."

 

They both believed that space for further losses was limited due to the supply and demand situation.

 

"People in the industry estimated that the soybean output would drop around 30% in Heilongjiang province this year," Li said.

 

Heilongjiang is the largest soybean-producing region in China with an output of around 9.5 million tonnes last year, more than half of the country's total, according to Li.

 

"Demand has shown signs of recovery with prices for soymeal and soybean rising on the spot market," Gao added.

 

No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mostly higher. But the benchmark September contract settled at RMB2,488/tonne, down RMB28/tonne.

 

Soymeal futures settled mostly lower. The benchmark January 2007 contract fell RMB13/tonne to settle at RMB2,238/tonne, after trading between RMB2,233/tonne and RMB2,244/tonne.

 

Total trading volume for soymeal dropped to 105,702 lots from 114,642 lots Friday.

 

"Prices for imported soybeans were quoted around RMB2,606/tonne today, down over RMB11/tonne from last week, weighing on soymeal futures," Li said.

 

Soyoil settled mostly lower. The most active January 2007 contract fell RMB40 to settle at RMB5,573/tonne.

 

"Soyoil futures, holding at a high level, have experienced frequent fluctuations lately. However, futures prices will not fall too much as demand for soyoil is expected to increase in the fall," Gao said.

 

Corn futures settled mostly down. The benchmark May 2007 contract settled at RMB1,395/tonne, down RMB7/tonne.

 

Total trading volume for corn fell to 294,726 lots from 325,786 lots Friday.

 

"The retreat in corn futures today could be attributed to spillover effects of soymeal losses," Li said.

 

"Corn futures are expected to rebound in coming weeks, in step with soymeal futures, as demand for feed is looking up, with livestock farmers increasing production," Gao added.