October 12, 2006

 

Thursday: China soybean futures settle down a tad ahead of USDA

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled slightly lower Thursday as market participants anticipate record production projections from the U.S. Department of Agriculture's crop report to be released later in the day.

 

The benchmark January 2007 contract fell RMB1 to settle at RMB2,534 a metric tonne, after trading between RMB2,530/tonne and RMB2,538/tonne.

 

Total trading volume was 9,550 lots versus 15,218 lots Wednesday.

 

One lot is equivalent to 10 tonnes.

 

Although CBOT soybean futures ended higher last night, they were off earlier gains as traders squared positions, which gave a signal on how the market will likely perform tonneight, said Beite Futures Co. analyst Zeng Xuezhou.

 

"The supply side is still bearish and the situation in China is even worse than that in the U.S. where a large amount of our imports come from," Zeng said.

 

Soymeal and soyoil futures settled mostly up a tad, in line with overnight gains on CBOT.

 

The benchmark January 2007 soymeal contract rose RMB1 to settle at RMB2,228/tonne, after trading between RMB2,223/tonne and RMB2,234/tonne.

 

The most widely-held January 2007 soyoil contract gained RMB18 to settle at RMB5,549/tonne.

 

However, "the harvest of soybean and the existing high inventory level (of soymeal and soyoil) are likely to pressure prices of both products in the following weeks," said a trader at a Beijing-based brokerage.

 

"Soy futures are just weighed down heavily by ample supply, which can't seem to be easily changed in the short term," he said.

 

Corn futures settled higher, underpinned by strong domestic demand and gains in CBOT corn, analysts said.

 

The benchmark May 2007 contract settled RMB15 higher at RMB1,459/tonne, after trading between RMB1,451/tonne and RMB1,468/tonne.

 

Total trading volume for corn rose to 530,776 lots from 448,070 lots Wednesday.

 

"The prices of pig and poultry have been rising in recent months, and the feed demand is thus rising, which further fueled the market's confidence in corn," said Zhang Yifan, a trader at China Grains & Oils Group Feed Corp.

 

Corn is still mainly used as animal feed in China, but its industrial use is also growing quickly.