Wednesday: China soy futures settle down; lack of outside support

 

 

Soy futures traded on the Dalian Commodity Exchange settled lower Wednesday, due to a lack of support from the Chicago Board of Trade.

 

The benchmark May 2010 soy contract settled RMB7 a metric tonne lower at RMB3,735/tonne.

 

Its CBOT counterpart has been consolidating around $10 per bushel in recent sessions, failing to lend further support to the DCE contract, which had been rising after the National Day holiday.

 

It's also difficult for the benchmark contract to fall, however, given the government's policy of continuing to purchase soy from farmers this year.

 

Tuesday, the State Administration of Grain issued a statement requesting eight local grain branches in major northeastern and eastern corn and soy producing areas to survey input costs for 2008-2010 crops to help the government decide on grain-supporting policies.

 

"The benchmark contract is well supported at RMB3,700/tonne," the purchasing price for last year's crop, said Xu Wenjie, an analyst with Tianma Futures Co., who expects soy prices to consolidate in the near term.

 

The government sold 1,800 tonnes of soy during its weekly auctions Wednesday, or 0.36% of the 503,900 tonnes it offered for sale.

 

Trading volume for all soy contracts rose to 352,476 lots from 194,310 lots Tuesday.

 

Open interest rose 9,226 lots to 296,360 lots.

 

Corn futures, soymeal futures, palm oil futures and soyoil futures all settled lower.

 

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      3,735        Dn      7        352,476

Corn       May 2010      1,744        Dn      2         71,784

Soymeal  May 2010      2,843        Dn    19      1,756,776

Palm Oil   May 2010      6,092        Dn    74        195,266

Soyoil      May 2010      7,180        Dn    54        698,134