November 6, 2007

 

Tuesday: China soybean futures settle up despite govt aim to curb prices

 

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday despite the government's intention to curb rising vegetable oil prices.

 

The benchmark May 2008 soybean contract settled RMB43 higher at 4,462 a metric tonne.

 

Total trading volume declined to 673,660 lots from 743,116 lots Monday.

 

One lot is equivalent to 10 tonnes.

 

The National Development and Reform Commission Monday asked domestic oil processing plants to increase vegetable oil production and control price rise "to a reasonable level," according to a statement published on the commission's Web site.

 

However, the move has limited impact on the market as the government can do little to curb rising oil prices, said analysts.

 

Reduced domestic oilseed output this year, a result of government's policies in support of grain acreage and bad weather conditions, as well as rising international oil prices, have made the oil shortage an increasingly hot topic amid inflation concerns.

 

"The prices of vegetable oil are unlikely to fall as long as crude oil prices remain high," said an analyst with China National Grain and Oils Information Center.

 

While the government is concerned rising agricultural product prices will push up domestic inflation - already at a high growth rate at 6.2% in September - it won't allow the prices to fall much either in order to encourage farmer planting interests, said analysts.

 

Palm oil futures contracts settled mixed.

 

The benchmark May 2008 palm oil contract settled at RMB8,628/tonne, up RMB30/tonne from Monday.

 

Total trading volume for all palm oil futures declined to 3,980 lots from 4,670 lots Monday.

 

Soymeal futures and soyoil futures settled mostly higher.

 

The benchmark May 2008 soymeal contract settled RMB34 higher at RMB3,319/tonne, and the benchmark May 2008 soyoil contract settled RMB96 higher at RMB9,016/tonne.

 

Corn futures settled stronger.

 

The benchmark May 2008 contract settled RMB10 higher at RMB1,763/tonne.

 

Total trading volume for all corn futures declined to 859,488 lots from 1,178,764 lots Monday.