October 10, 2006

 

Tuesday: China soybean futures settle higher on CBOT; corn up

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday on strong overnight gains in the Chicago Board of Trade, analysts said.

 

The benchmark January 2007 contract settled RMB 11 higher at RMB2,550 a metric tonne, after trading between RMB2,540/tonne and RMB2,557/tonne.

 

Total trading volume rose to 29,624 lots from 20,690 lots Monday.

 

One lot is equivalent to 10 tonnes.

 

"CBOT gains prompted some fresh buying, but further gains in soy futures in the following sessions could be difficult," said Gao Yanrong, Dalu Futures Co.'s soy analyst.

 

Gao said rising supply in the local market is due to the ongoing harvest and lingering concerns over feed demand in the fall and winter, when possible bird flu outbreaks could pressure prices even if CBOT gains.

 

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 rose RMB53 to RMB2,667/tonne.

 

China National Grain and Oils Information Center said Tuesday that it cut its forecast of soybean output for 2006 to 15.5 million metric tonnes from its September forecast of 15.9 million tonnes.

 

However, analysts said such small a reduction won't have much impact on the market.

 

Soymeal and soyoil futures also settled higher, along with the overnight CBOT rise.

 

The benchmark January 2007 soymeal contract rose RMB19 to settle at RMB2,242/tonne, after trading between RMB2,227/tonne and RMB2,249/tonne.

 

The most widely-held January 2007 soyoil contract rose RMB51 to settle at RMB5,565/tonne.

 

Dalian's corn futures settled higher on fresh buying, following the overnight surge in CBOT, analysts said.

 

The benchmark May 2007 contract gained RMB31 to settle at RMB1,445/tonne, after trading between RMB1,425/tonne and RMB1,451/tonne.

 

Total trading volume for corn rose sharply to 665,496 lots from 236,066 lots Monday.

 

Market participants believe that China will become a net corn importer, possibly as early as 2007, if the weather isn't good for the growth of the crop.

 

"The surge in CBOT last night has boosted local investor sentiment, which offset the impact of rising supply in the harvest season," said a Shanghai-based trader.

 

"Strong fundamentals for corn are likely to result in more gains, as long as CBOT sends positive signals," she said.