November 10, 2008
Monday: China soybean futures settle up on RMB4 trillion stimulus plan
Soybean futures traded on the Dalian Commodity Exchange settled sharply higher Monday, boosted by the government's 4 trillion yuan economic stimulus plan.
China's benchmark May 2009 soybean contract settled RMB85 higher at RMB3,349/tonne, or up 2.6%.
On Sunday, the country's State Council said the government will invest RMB4 trillion by the end of 2010 as part of an economic stimulus plan aimed at boosting economic growth, with an initial investment of RMB100 billion on construction projects in the fourth quarter.
China will also implement value-added tax reform, which will reduce the tax burden on enterprises by RMB120 billion.
The plan helped to support a rebound in agricultural commodities markets, which have been lackluster recently, said Gao Yanrong, an analyst at Dalu Futures Co.
But many analysts said the plan will help to raise sentiment more than actual demand.
"It's hard to tell whether the economy will (be boosted by the plan)," said Cui Ruijuan, an analyst at Guangfa Futures Brokerage.
However, analysts expect demand for vegetable oil to pick up ahead of the year end holidays.
Gao said the market has seen a bottom in the near term, but could fall further in the longer run if global financial woes continue to weigh on demand.
Expectations of a favorable monthly U.S. Department of Agriculture crop production report due out Monday also helped to push up prices.
A Dow Jones Newswires survey of 18 analysts put the average soybean production estimate at 2.916 billion bushels, below the USDA's current forecast of 2.938 billion bushels. The analyst's average soybean yield was 39.2 bushels per acre, below the USDA's 39.5. On average, analysts pegged the new-crop carryout at 189 million bushels, compared to the USDA's current estimate of 205 million bushels.
Open interest in all soybean contracts rose 3,664 lots to 593,396 lots Monday.
Trading volume declined to 737,490 lots from 826,138 lots Friday.
Corn futures, soymeal futures, soyoil futures and palm oil futures all settled higher.
Benchmark palm oil futures touched limit-up during the session.
Following are Monday's settlement prices in yuan a metric tonne for benchmark contracts and volume for all contracts in lots (one lot is equivalent to 10 tonnes):
Contract Settlement Price Change Volume
Soybean May 2009 3,349 Up 85 737,490
Corn May 2009 1,637 Up 11 155,038
Soymeal May 2009 2,579 Up 66 676,200
Palm Oil Jan 2009 4,834 Up 204 43,718
Soyoil Jan 2009 6,758 Up 240 459,592