November 16, 2007

 

Friday: China soybean futures settle mostly down on govt policy concerns

 

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly lower Friday, amid strong expectations that the government will issue monetary tightening policies over the weekend.

 

The benchmark September 2008 soybean contract settled RMB24 lower at RMB4,540 a metric tonne.

 

Total trading volume declined to 971,498 lots from 973,058 lots Thursday. One lot is equivalent to 10 tonnes.

 

China's consumer price index growth rebounded to 6.5% in October, matching August's almost 11-year high, with main culprit food prices rising 17.6%, according to government data issued earlier this week.

 

The market has been expecting the government to issue further tightening policies such as an interest rate hike to curb high inflation.

 

China's central bank said last Saturday it would raise the reserve requirement ratio for banks for the ninth time this year as it continues trying to slow lending growth.

 

"Funds were exiting the market before the weekend, as the (possible) rate hike will result in higher costs (for trading futures contracts)," said Xu Wenjie, an analyst at Tianma Futures Co.

 

Palm oil futures and soyoil futures settled mostly lower.

 

The benchmark May 2008 palm oil contract settled at RMB8,820/tonne, down RMB106 from Thursday.

 

Total trading volume for all palm oil futures rose to 8,560 lots from 7,100 lots Thursday.

 

The benchmark May 2008 soyoil contract settled RMB168 lower at RMB9,498/tonne.

 

The Ministry of Agriculture said Friday that China's agricultural products prices are rising mainly due to high international prices and rising raw material costs, and the government can guarantee the market supply.

 

But analysts said the government doesn't have much state reserves on hand to provide the market with staple items such as pork and vegetable oil, so food prices are likely to remain high through the end of the year.

 

Soymeal futures settled mostly higher.

 

The benchmark May 2008 soymeal contract settled RMB21 higher at RMB3,527/tonne.

 

Corn futures settled lower.

 

The benchmark May 2008 contract settled RMB20 lower at RMB1,757/tonne.

 

Total trading volume for all corn futures rose to 923,440 lots from 772,482 lots Thursday.