September 19, 2006

 

Tuesday: China soybean futures settle lower on oversupply

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday as an oversupply worsened with the early harvest continuing to enter the market, analysts said.

 

The most active January 2007 contract settled RMB7 lower at RMB2,557 a metric tonne, after trading between RMB2,552 and RMB2,567/tonne.

 

Total trading volume dropped to 8,988 lots from 16,392 lots Monday. One lot is equivalent to 10 tonnes.

 

"Prices for the early harvest of soybeans, which have appeared in the market in producing regions this week, were lower than those in the same period last year, weighing on futures," said Zeng Xuezhou, an analyst at Beite Futures Co.

 

"Soybean futures fell today on long liquidation and short selling. Investors are prudent, as further losses are expected before the new harvest enters the market on a large scale in November," said Li Honglei, an analyst at Nanhua Futures Co.

 

No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled higher. But the benchmark September contract was unchanged.

 

Soymeal futures settled mostly lower. The benchmark January 2007 contract fell RMB7 to settle at RMB2,238/tonne, after trading between RMB2,230 and RMB2,249/tonne.

 

Total trading volume for soymeal fell to 87,798 lots from 93,352 lots Monday.

 

"The recovery in demand for soymeal is not as strong as expected. Trading volume continued to decline today amid the weak market sentiment," Li said.

 

Soyoil settled mostly lower, but the most widely held January 2007 contract rose RMB1 to settle at RMB5,622/tonne.

 

Corn futures settled down. The benchmark May 2007 contract settled at RMB1,414/tonne, down RMB3.

 

Total trading volume for corn rose to 370,654 lots from 163,114 lots Monday.

 

"Although unfavorable weather conditions, such as droughts and early frosts, were witnessed in major producing regions recently, the market still expects the upcoming harvest of corn to be good, pressuring futures prices," Zeng added.