October 9, 2006

 

Monday: China soybean futures settle mostly down on supply concerns

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Monday on concerns that the local harvest in October will pressure prices.

 

The decline came despite gains on the Chicago Board of Trade last week, when China's markets were closed for the National Day holidays.

 

On Monday, the benchmark January 2007 contract settled RMB5 lower at RMB2,539 a metric tonne, after trading between RMB2,528/tonne and RMB2,554/tonne.

 

Total trading volume rose slightly to 20,690 lots from 9,926 lots Sept. 29. One lot is equivalent to 10 tonnes.

 

"The harvest is approaching," and we saw some fresh short positions betting on lower prices amid rising supply," said a trader based in Shanghai.

 

But "the downside should be limited, as CBOT sees a bottom technically, and is unlikely to fall further," said Li Honglei, an analyst at Nanhua Futures Co.

 

Analysts added that post-holiday buying usually recedes slightly due to leftover inventories, which clouded market sentiment.

 

No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mixed in extremely thin trade.

 

The most active September 2007 contract fell RMB11 to RMB2,614/tonne.

 

Soymeal and soyoil futures settled mostly higher, tracking gains on CBOT last week, analysts said.

 

The benchmark January 2007 soymeal contract rose RMB3 to settle at RMB2,223/tonne, after trading between RMB2,217/tonne and RMB2,231/tonne.

 

The most widely-held January 2007 soyoil contract rose RMB28 to settle at RMB5,514/tonne.

 

Meanwhile, Dalian's corn futures settled higher thanks CBOT's gains and strong local demand, analysts said.

 

"Although corn also faces rising supply due to the harvest season, strong demand on the fast-expanding processing industry will underpin prices," said Zhang Yifan, a trader at China Grains & Oils Group Feed Corp.

 

The benchmark May 2007 contract gained RMB8 to settle at RMB1,414/tonne.

 

Total trading volume for corn was at 236,066 lots versus 155,024 lots Sept. 29.