September 24, 2007

 

Monday: China soybean futures settle down on concerns of more supply

 

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly lower Monday, after the government said it will release grains and vegetable oils from state reserves to stabilize volatile food prices.

 

The benchmark May 2008 soybean contract settled RMB39 lower at RMB4,068 a metric tonne.

 

Total trading volume declined to 678,354 lots from 850,730 lots Friday. One lot is equivalent to 10 tonnes.

 

China took further measures Friday to ease upward pressure on food prices, which are a major cause of rising inflation. In August, China's inflation hit the highest level in more than 10 years.

 

Besides making more grain and vegetable oil available in the domestic market at lower prices, the government will also cut the import duty on soybean to 1% from 3% starting from October for up to three months, to encourage imports and increase the availability of feedmeal as well as edible oils.

 

Market players are concerned that a rise in supply will cause prices to fall in the short term, analysts said

 

However, such impact could be brief as "the release of stocks is not enough to push the demand-driven prices lower," said Xia Tian, an analyst at Yongan Futures.

 

He expects high domestic inflation and excess liquidity to continue to support the prices of agricultural products at high levels in the fourth quarter.

 

Soymeal futures and soyoil futures settled mostly lower.

 

The benchmark May 2008 soymeal contract settled RMB51 lower at RMB3,146/tonne, and the benchmark May 2008 soyoil contract settled RMB36 lower at RMB8,306/tonne.

 

Corn futures also settled lower.

 

The benchmark May 2008 contract settled RMB23 lower at RMB1,636/tonne.

 

Total trading volume for corn futures declined to 485,996 lots from 521,726 lots Friday.