October 24, 2005

 

Monday: China soybean futures settle lower; corn mostly higher

 

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Monday, extending their recent downtrend.

 

The local market slumped Friday on concerns of an outbreak of the bird flu virus.

 

China reported its latest outbreak of the virulent H5N1 bird flu strain among fowl last week in its Inner Mongolia region, which is in the country's north.

 

Soybeans on the Chicago Board of Trade also fell Friday.

 

The benchmark May 2006 contract lost RMB36 to settle at RMB2,741 a metric tonne Monday, after touching a four-month low of RMB2,713/tonne. It rose as high as RMB2,753/tonne.

 

Open interest in the benchmark increased noticeably during the day, but some of the increase was trimmed ahead of the market close, indicating short-term trading in general, analysts said.

 

Overall, selling by short position holders was more aggressive compared with some buying from bargain hunters, who deem the recent market slump a little overdone.

 

However, trading was slower compared with Friday, with volumes falling to 424,258 lots from 719,740 lots. One lot is equivalent to 10 tonnes.

 

Analysts said weakness in soy meal futures continues to pressure local soybeans.

 

"The pressure is expected to stay for a while and even grow if more bird flu news emerges," said a Dalian-based analyst.

 

"Market sentiment is currently fragile."

 

Trading of No. 2 soybean contracts, which can be delivered with soybeans harvested from genetically modified crops but are seldom traded, settled lower.

 

The May 2006 No. 2 contract fell RMB63 to settle at RMB2,720/tonne, after trading between RMB2,672/tonne and RMB2,740/tonne.

 

Dalian's soy meal futures settled lower, despite some buying by long position holders following active liquidation in the last session.

 

The benchmark May 2006 contract lost RMB45 to settle at RMB2,374/tonne, after touching a low of RMB2,350/tonne. It hit an intraday high of RMB2,393/tonne.

 

Corn futures on the Dalian exchange settled mostly higher, largely due to some bargain hunting.

 

The most heavily traded January 2006 contract gained RMB3 to settle at RMB1,233/tonne, after trading between RMB1,228/tonne and RMB1,236/tonne.

 

The most widely held May 2006 contract rose RMB4 to settle at RMB1,269/tonne.

 

China's futures trading is off-limits to foreign investors.