Tuesday: China soy futures scrape gains; commodities lack direction

 

 

Soy futures edged up slightly on the Dalian Commodity Exchange Tuesday, eking out gains amid a lackluster commodities complex as favorable weather patterns continued to threaten prices with the promise of sizable crop supplies.

 

The benchmark May 2010 soy contract settled 0.1% lower at RMB3,711 a metric tonne.

 

"The general market situation among all commodities was quite directionless today, and soy was actually an outperformer in comparison," said Gao Yanrong, a research manager with Dalu Futures.

 

Apart from soy's small gains, sentiment on the Dalian exchange was largely dragged down by lower equity markets, weighed by concerns over declining international oil prices.

 

Despite the dollar resuming its slide against the euro, favorable weather has renewed fears both Chinese and U.S. soy could see sizable crops in the imminent harvest.

 

Chicago Board of Trade soy futures fell Monday, with prices sliding tracking a frost-free weather outlook and general weakness in the commodity complex maintaining a bearish influence on the market.

 

"Grain prices remain under pressure as frost-related weather concerns in the US are dissipating," Barclays Capital said in a note late Monday.

 

However, traders said an extended drought could still cause a brittle crop more susceptible to frost should the cold strike earlier and harder than forecast, Gao said.

 

Soy prices also found some strength from forecasts of lower imports in coming months.

 

China is expected to import only 1.8 million tonnes in October, the lowest since February 2007 and sharply lower versus 2.8 million tonnes projected for September, underlining the effect of state soy stockpile sales, pricier imports and a conventional period of a lull in demand around this time of the year.

 

Soy imports in August fell 18% from last August while corn exports fell 53% to 11,862 tonnes, according to official data issued Tuesday.

 

Corn, soymeal, palm oil and soyoil futures posted declines Tuesday.

 

Tuesday's settlement prices in yuan a metric 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      3,711        Up    5           790,690

Corn       May 2010      1,740        Dn    5           74,838

Soymeal  May 2010      2,769        Dn   11          945,376

Palm Oil  May 2010      5,918        Dn   76           331,740

Soyoil     May 2010      7,006        Dn   68          480,788