Tuesday: China soy futures lower; investors liquidate positions

 

 

Soy futures drifted lower on the Dalian Commodity Exchange Tuesday as investors continued to liquidate positions in preparation for China's eight-day national holiday.

 

The benchmark May 2010 contract settled 0.3% lower at RMB3,563 a metric tonne.

 

"There's a fear of sharp changes in external markets affecting us when we reopen after the national holiday break," said Wang Xiaoguang, an analyst with Galaxy Futures.

 

While mildly bearish outlook continued to plague commodity markets, the sentiment was influenced more by memories of last year's post-holiday bloodbath, analysts said. Last year, Lehman Brothers collapsed during the national-day break, and Chinese markets faced consecutive days of sell-off at their lower limit in the aftermath.

 

"This time round, short-selling sentiment is in dominance," Wang said.

 

Worries about external markets trimmed gains from a report Monday by the U.S. Grains Council projecting a 9.7% decrease from a year earlier in China's corn crop to 148.79 million tonnes.

 

"The soy crop is expected to fall a bit as well, but it's not enough to offset sentiment," Wang said.

 

Corn and soymeal futures, bolstered by the news, rose 0.4% each Tuesday. Soyoil and palm oil futures posted declines.

 

The Chinese national holiday, including a celebration of the 60th anniversary of the communist state as well as the Chinese Mid-Autumn Festival, kicks off Wednesday.

 

Chicago Board of Trade soy futures retreated Monday on seasonal pressure ahead of the fall harvest.

 

Buyers are defensive on anecdotal yield estimates from early harvests in the western U.S. Midwest, and with low frost risk in major growing areas.

 

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      3,563        Dn     11           181,716

Corn       May 2010      1,718        Up      6            46,690

Soymeal  May 2010      2,692        Up     12           794,720

Palm Oil   May 2010      5,716        Dn     14          269,370

Soyoil      May 2010      6,712        Dn     54          494,554