Friday: China soy futures settle down, weighed by CBOT,weak demand

 

 

Soy futures traded on China's Dalian Commodity Exchange settled mostly lower Friday, tracking losses in Chicago Board of Trade soy overnight, with further downside likely in coming days due to weak demand, analysts said.

 

The benchmark May 2010 soy contract settled 1.0% lower at RMB3,590 a metric tonne. Total trading volume for all soy contracts fell to 231,686 lots from 319,876 lots Thursday.

 

"The demand at the moment doesn't look so good," said Gao Yanrong, an analyst at Dalu Futures. "People had expected a spike ahead of the holidays, but this doesn't seem to be happening."

 

China's National Day holiday and Mid-Autumn Festival coincide this year, giving Chinese an eight-day holiday in early October, which prompted market expectation of a soy product demand rise in August and September.

 

Supply side issues due to dry weather in northeastern growing regions likely won't be much of a factor either, Gao said. The country's soy stocks "should be sufficient to more than offset any potential impact on production this year brought by the drought," he said.

 

Analysts and physical traders thus expect further downside in both cash prices and futures in the short term.

 

"The high inventory level (of soy in state reserves) has been and will continue weighing on prices," said Tu Xuan, an analyst with commodities consultancy Shanghai JCI.

 

Meanwhile, the latest data from shippers showed arrivals in August are estimated around 2.6 million tonnes, down from an earlier estimate of 2.8 million tonnes and average monthly arrivals of 3.78 million tonnes in the January-July period.

 

Soymeal and soyoil futures also settled mostly lower.

 

"Crushers mostly have very high inventories of soyoil, and some have planned to suspend operations in September, simply because there will be no room for more products," said a trader in Heilongjiang province.

 

Friday's settlement prices for benchmark contracts in yuan a metric tonne and volume for all contracts in lots (One lot is equivalent to 10 tonnes):

 

Contract   Settlement      Price    Change    Volume

Soy           May 2010     3,590    Dn  37     231,686

Corn         May 2010     1,748    Dn   4      146,712

Soymeal    May 2010     2,762    Dn  28   1,712,938

Palm Oil    May 2010     6,074    Up   24    559,388

Soyoil       May 2010     7,136    Dn   14    912,020