November 8, 2005

 

Tuesday: China soybean futures settle slightly lower; trading slows

 

 

Most soybean futures traded on the Dalian Commodity Exchange settled slightly lower Tuesday, as trading slowed on a lack of fresh leads.

 

The benchmark May 2006 soybean contract edged down RMB2 to settle at RMB2,743 a metric tonne, after trading in a narrow range of RMB2,730-RMB2,749/tonne.

 

The total trading volume for soybeans fell to 140,354 lots from 261,578 lots Monday. One lot is equivalent to 10 tonnes.

 

The benchmark opened at its intraday low of RMB2,730/tonne, following a moderate fall in Chicago Board of Trade soybeans overnight.

 

However, bargain hunting quickly lifted the local benchmark to its intraday high of RMB2,749/tonne within the first 20 minutes of trading.

 

It then remained range-bound for the rest of the day, without any news to push it significantly higher or lower.

 

The recent bird flu outbreaks in the country have been factored into futures prices and the disease isn't expected to spread widely across the China, as the government has intensified its efforts to contain the spread of the disease, analysts said.

 

"As such, the local market may continue to consolidate around recent low levels ahead of Friday's USDA reports," said a Dalian-based analyst.

 

The U.S. Department of Agriculture is scheduled to release Friday its latest estimates for U.S. crop production as well as world agricultural supply and demand.

 

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 RMB13 to settle at RMB2,711/tonne.

 

Five out of eight soymeal futures on Dalian settled slightly lower, but the benchmark May 2006 soymeal contract inched up RMB2 to settle at RMB2,351/tonne on bargain-hunting.

 

The benchmark traded from RMB2,332-RMB2,360/tonne. Monday, it hit an eight-month intraday low of RMB2,330/tonne.

 

In recent days, soymeal trading has been more active than for soybeans, as soymeal is mainly used as an animal feed and thus more sensitive to bird flu developments.

 

Most of the corn futures traded on the Dalian exchange settled marginally higher after losses over the past several trading days.

 

Still, the benchmark May 2006 contract settled flat at RMB1,262/tonne, after trading between RMB1,258/tonne and RMB1,267/tonne.

 

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