November 7, 2005

 

Monday: China soybean futures settle sharply down on bird flu, CBOT

 

 

Soybean futures on the Dalian Commodity Exchange settled sharply lower Monday on a mix of long liquidation and short selling, pressured by renewed worries over bird flu outbreaks in China and Friday's fall in Chicago Board of Trade soybeans, analysts said.

 

Soymeal futures were hard-hit by concerns of bird flu, with the benchmark May 2006 soymeal contract falling to an eight-month low of RMB2,330 a metric tonne before settling RMB64 lower at RMB2,349/tonne.

 

Over the weekend, local media reported that China can't rule out the possibility of human infection from the deadly H5N1 strain of bird flu virus.

 

Recently, the central government has held a series of meetings to contemplate measures to curb the spread of the disease.

 

In Beijing, the city government has banned trading of live poultry and shut down bird markets, effective Monday.

 

In Liaoning, local governments are said to have culled nearly 6 million fowls after an outbreak of the disease in a village.

 

Analysts said they expect the futures market to stay at current low levels for a while if concerns over bird flu don't subside.

 

By the close, the benchmark May 2006 soybean contract lost RMB57 to settle at RMB2,745/tonne, after trading between RMB2,731-RMB2,774/tonne.

 

The total trading volume for soybeans fell to 261,578 lots from 401,572 lots Friday. One lot is equivalent to 10 tonnes.

 

The No. 2 soybean contracts, which are encouraged to be delivered with imported genetically modified crops but are seldom traded, settled mostly lower.

 

The May 2006 No. 2 contract gave up RMB37 to settle at RMB2,724/tonne.

 

Most of Dalian soymeal futures settled sharply higher, dragged down by active long liquidation and some short selling.

 

However, the nearby November 2005 contract settled RMB8 higher at RMB2,368/tonne on small-lot covering by short position holders who didn't have any stocks to deliver.

 

Corn futures on the Dalian exchange settled lower, mostly on long liquidation triggered by bird flu worries.

 

The benchmark May 2006 contract settled RMB13 lower at RMB1,262/tonne, after trading between RMB1,256/tonne and RMB1,267/tonne.

 

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