November 05, 2003

 

 

China Soybean Futures Settle Sharply Down On Profit Taking

 

China's soybean and soymeal futures at the Dalian Commodity Exchange settled sharply lower Wednesday, with most contracts falling to their limit-lows on profit taking by long position holders.

 

All nine soybean contracts fell their 3% limit during the day, with eight of the contracts remaining at those levels until the market closed.

 

The most heavily traded May 2004 soybean dropped RMB103 ($1=RMB8.28) a metric ton to RMB3,348/ton.

 

Total trading volume for soybean futures slipped to 194,982 lots from Tuesday's 621,554 lots. Open interest fell to 446,288 lots from the previous 462,484 lots.

 

One lot is equivalent to 10 tons.

 

Soymeal futures also suffered bouts of aggressive profit taking. Five of six soymeal contracts hit limit-lows during the day.

 

The benchmark January 2004 soymeal lost RMB87/ton to RMB2,823/ton.

 

Besides profit taking following weeks of sharp gains, traders speculated local soybean farmers may have been attracted by the recent rise in prices and finally released stocks. Farmers had been holding onto their beans harvested in September.

 

"Although it is hard to track the volume of soybeans sold by local farmers, we believe they are doing it as soybean prices are high enough to make a huge profit," said a trader at Dalu Futures in Shanghai.

 

Despite the fall Wednesday, soybean and soymeal futures prices may still have some room to move up.

 

"The market was severely overbought, but higher prices are still possible as long as the tight supply situation doesn't change," said a local analyst.

 

Analysts predicted the most heavily traded May 2004 soybean could hit RMB3,500/ton, a record high, in November.