October 31, 2005

 

Monday: China soybean futures settle slightly down; lackluster trade

 

 

Most soybean futures on the Dalian Commodity Exchange settled slightly lower in lackluster trading Monday amid a lack of fresh trading leads.

 

The benchmark May 2006 contract lost RMB3 to settle at RMB2,738 a metric tonne, after trading in a tight range of RMB2,728-RMB2,743/tonne.

 

Total trading volume in soybeans fell to 143,704 lots from 218,700 lots Friday. One lot is equivalent to 10 tonnes.

 

Many local market participants stayed on the sidelines despite a moderate fall Friday in Chicago Board of Trade soybeans.

 

The local market has been losing more or gaining less than CBOT soybeans in the past week or so, due to renewed bird flu concerns in China, some analysts said, explaining the lack of trading activity. Dalian usually mimics the CBOT soybean market.

 

"The local market doesn't need to match every inch that CBOT soybeans gave up Friday," one analyst said. "It has been the pioneer in the downside recently."

 

Some analysts pegged a consolidatory range of RMB2,700-RMB2,750/tonne for the local benchmark in the near term, if the spread of bird flu doesn't intensify in the coming days.

 

China has reported bird flu outbreaks in Inner Mongolia, Anhui and Henan this month.

 

Previously, the country had confirmed spreads of the disease in Xinjiang, Qinghai and Tibet during the summer season.

 

Trading of No. 2 soybean contracts, which are encouraged to be delivered with imported genetically modified crops but are seldom traded, settled mixed.

 

The May 2006 No. 2 contract gained RMB2 to settle at RMB2,719/tonne after trading between RMB2,712/tonne and RMB2,725/tonne.

 

Dalian soymeal futures settled mixed, mostly consolidating around recent lows on a scarcity of news.

 

Both long buying and short selling were seen in the benchmark May 2006 contract, which settled flat at RMB2,375/tonne, after trading between RMB2,362/tonne and RMB2,385/tonne.

 

Corn futures on the Dalian exchange settled lower, mostly on long liquidation.

 

Analysts said corn prices are expected to face seasonal downside pressure as more and more new corn supplies enter the domestic market.

 

The new benchmark May 2006 contract settled RMB12 lower at RMB1,261/tonne, after trading between RMB1,258/tonne and RMB1,268/tonne.

 

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