October 17, 2006

 

Tuesday: China soybean futures settle higher on positive sentiment

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday amid bullish sentiment.

 

"Investors turned pretty optimistic, thanks to recent gains on the Chicago Board of Trade and the bullish harvest outlook in South America," said Li Honglei, an analyst at Nanhua Futures Co.

 

"China's soybean harvest is expected to drop in both quantity and quality, adding to the positive sentiment," he added.

 

The benchmark January 2007 contract gained RMB9 to settle at RMB2,581 a metric tonne, after trading between RMB2,569/tonne and RMB2,598/tonne.

 

Total trading volume fell to 44,190 lots from 58,800 lots Monday. One lot is equivalent to 10 tonnes.

 

Shi Junfeng, an analyst at Tianma Futures Co., agreed with Li, adding that "rises in sugar and rubber futures are also lending spillover support to soy futures."

 

Soymeal futures settled mostly higher. The benchmark January 2007 soymeal contract rose RMB4 to settle at RMB2,287/tonne, after trading between RMB2,274/tonne and RMB2,299/tonne.

 

Total trading volume rose to 263,522 lots from 257,434 lots Monday.

 

"The market expects prices for imported soybean to rise, due to CBOT gains. Moreover, the stock level of imported soybeans has declined as import arrivals droped to below 2 million in September and are not expected to rebound substantially this month," Li said.

 

"Spot prices have risen around RMB20-RMB50/tonne since the beginning of October, supporting futures prices," added Shi.

 

Soyoil futures settled mostly up as well, finding borrowed support from gains in other soy futures, analysts said.

 

The most active May 2007 soyoil contract settled RMB6 higher at RMB5,641/tonne.

 

Corn futures settled mostly higher too. But the benchmark May 2007 contract fell RMB1 to settle at RMB1,483/tonne, after trading between RMB1,474/tonne and RMB1,488/tonne.

 

Total trading volume for corn fell to 453,482 lots from Monday's 608,596 lots.

 

"China doesn't import corn on a large scale. So rises on the CBOT have only a limited impact on domestic prices. Demand for feed is sluggish after the weeklong National Day holidays earlier this month, pressuring corn prices," Shi said.