October 23, 2007

 

Tuesday: China soybean futures settle up on stronger soy oil prices

 

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday on stronger soyoil prices.

 

The benchmark May 2008 soybean contract settled RMB60 higher at RMB4,287 a metric tonne.

 

Total trading volume rose to 909,912 lots from 792,944 lots Monday.

 

One lot is equivalent to 10 tonnes.

 

Domestic soyoil consumption is likely to rise further, while high palm oil prices will continue to support soyoil prices, said Kang Bing, a research manager at Jingyi Futures Co.

 

The DCE will launch palm oil futures contracts next week. Analysts expect prices of the three vegetable oil futures traded in China- palm oil futures, soyoil futures and rapeseed oil futures - to have an impact on one another. Prices of these futures are likely to go higher due to increasing demand for biofuels.

 

The consumption of global vegetable oil is increasing at a rate of 3%-4% per year, and with economic growth, there is great potential in developing countries to increase their vegetable oil consumption, said the DCE in its report.

 

Soymeal futures and soyoil futures settled mostly higher.

 

The benchmark May 2008 soymeal contract settled RMB41 higher at RMB3,260/tonne, and the benchmark May 2008 soyoil contract settled RMB88 higher at RMB8,704/tonne.

 

But Wang Xiaoguang, an analyst at Galaxy Futures, expected China's soybean demand to become lower in the long run as palm oil consumption may gradually replace some demand for soyoil due to rising freight fees.

 

Freight fees from U.S. ports to Chinese ports are currently above $120/tonne, compared with just above $100/tonne earlier this month, due to rising demand for imports like iron ore and coal.

 

Corn futures settled lower.

 

The benchmark May 2008 contract settled RMB1 lower at RMB1,642/tonne.

 

Total trading volume for all corn futures rose to 404,144 lots from 285,566 lots Monday.