November 16, 2005

 

Wednesday: China soybean futures settle lower; two new bird flu cases

 

 

China's Dalian Commodity Exchange soybean futures settled mostly lower Wednesday, consolidating around recent low levels after Chicago Board of Trade soybeans fell slightly overnight.

 

The benchmark May 2006 soybean contract lost RMB9 to settle at RMB2,726 a metric tonne, after trading between RMB2,718 and RMB2,737/tonne.

 

Total trading volume for soybean futures rose to 159,752 lots from 128,936 lots Tuesday. One lot is equivalent to 10 tonnes.

 

Late Tuesday, the Ministry of Agriculture said on its Web site that two new cases of bird flu had been confirmed in the western Xinjiang autonneomous region, bringing the total number of cases in China to 11 in the past month.

 

Analysts said the news isn't something surprising to the local market, as many local players have been preparing themselves for such repeated bird flu outbreaks by liquidating their long positions on expectations the situation will worsen.

 

In addition, Xinjiang isn't regarded as a major consumption region for feed such as soymeal and corn, some said.

 

"The Chicago Board of Trade continues to be the main market driver, although the local market could lose more or gain less (than CBOT soybeans) due to other local factors such as bird flu," said one analyst.

 

Three of the six No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled lower, with the other three untraded.

 

The No. 2 May 2006 soymeal contract fell RMB8 to settle at RMB2,710/tonne, after trading between RMB2,704 and RMB2,715/tonne.

 

Dalian's soymeal futures settled lower, with the benchmark May 2006 soymeal contract losing RMB13 to settle at RMB2,329/tonne. The contract traded between RMB2,321 and RMB2,343/tonne.

 

Corn futures traded on the exchange settled lower, but the losses were larger than usual due to a combination of liquidation in the near month contracts and fresh selling in the forward contracts.

 

The most heavily traded September 2006 contract gave up RMB11 to settle at RMB1,276/tonne, after trading between RMB1,272 and RMB1,284/tonne.