September 16, 2009

 

Wednesday: China soy futures rise on CBOT gains, bullish supply cues

 

 

Soy futures rose on the Dalian Commodity Exchange Wednesday, fueled by a rally on the Chicago Board of Trade and concerns about supply.

 

The benchmark May 2010 soy contract settled 1.9% higher at RMB3,650 a tonne.

 

But even as investors remain optimistic about the overall outlook for global grain prices, they are keeping a watchful eye on China's soy stockpiling policies.

 

"The CBOT's performance was very strong yesterday, and Dalian's catch-up today was still not as strong as CBOT," said Xu Wenjie, an analyst with Tianma Futures. "The market is still waiting to find out the government's stockpiling policy for the next crop."

 

The 2009 harvest is forecast at 14.5 million tonnes, 6.7% smaller than a year ago.

 

But relatively weak sales of soy reserves this year have left a question mark over the government's plans for the remainder of this year's state stocks, which could potentially weigh on supply.

 

The government has sold only about 2% of the 4 million tonnes of state soy reserves it wants to sell, achieving a 3% success rate in weekly sales begun since July 21, according to the China Grain and Oil Information Center Wednesday.

 

"Everyone's waiting to see what the government will announce as its reserves policy for the next crop," Xu said.

 

Soy futures on the Chicago Board of Trade rose sharply Tuesday on speculative buying tied to frost threats in the U.S. Midwest.

 

Concerns of cooler than normal temperatures entering the central U.S. next week may undermine the supply of soys that are already two to three weeks behind the normal harvesting schedule in some states, AgriCharts said in a note Wednesday.

 

Corn, soymeal, palm oil and soyoil futures posted gains Wednesday.

 

Wednesday's settlement prices in yuan a 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               3,650                Up   67                175,518

Corn             May 2010               1,744               Up   10                130,898

Soymeal       May 2010               2,783                Up   66             1,099,680

Palm Oil        May 2010               5,944               Up  132                475,328

Soyoil           May 2010               7,032               Up  126                489,954