Wednesday: China soy futures settle down; high supply forecasts weigh

 

 

Soy futures fell for a sixth consecutive trading day Wednesday on the Dalian Commodity Exchange, slipping on the prospect of a record U.S. crop putting bearish pressure on import prices.

 

The benchmark May 2010 soy contract settled 0.4% lower at RMB3,548 a metric tonne.

 

Frost-free weather for late-maturing crops is expected to yield a record 2009 harvest of U.S. soy.

 

The anticipated record also weighed on soy futures Tuesday on the Chicago Board of Trade.

 

"The size of the expected U.S. harvest is weighing on prices. The soy crop in China is itself expected to be slightly smaller because of drought, though not enough to support prices," said Lin Xinghua of Great Wall Futures.

 

Soy supply remains strong, with sales of government soy reserves still failing to gain much traction.

 

On Wednesday, the National Grain and Oils Information Center said weekly sales of state reserves only attained 0.4% of the volume offered, continuing a streak of weak stockpile purchases by soy crushers.

 

Concerns over supply conditions prompted funds to liquidate positions ahead of China's eight-day holiday break, which starts Thursday.

 

However, corn, palm oil, soyoil and soymeal futures rose Wednesday, finding support in expected declines in corn output due to drought, tighter feedmeal supplies and residual holiday demand.

 

Wednesday'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      3,548        Dn    15         188,332

Corn       May 2010      1,721        Up      3           38,364

Soymeal  May 2010      2,700        Up      8          639,286

Palm Oil  May 2010      5,752        Up     36         168,244

Soyoil     May 2010      6,750        Up     38          306,204