November 17, 2005

 

Thursday: China soybean futures settle lower on CBOT; soymeal down

 

 

China's Dalian Commodity Exchange soybean futures settled lower Thursday, in line with an overnight decline in Chicago Board of Trade soybeans.

 

The benchmark May 2006 soybean contract fell RMB25 to settle at RMB2,701 a metric tonne after hitting RMB2,691/tonne, the lowest in more than eight months. Its intraday high was at RMB2,708/tonne.

 

Total trading volume for soybean futures rose to 263,672 lots from 159,752 lots Wednesday. One lot is equivalent to 10 tonnes.

 

A series of bird flu outbreaks in China in the past month have depressed the local soy and corn futures markets, and driven some players out of trading.

 

More participants decided to reduce their holdings after China late Wednesday said there were two confirmed cases of human infection of the disease. The announcement dragged down CBOT soybeans overnight.

 

The local benchmark soybean future contract is expected to consolidate at current low levels or lose more in the near term, even though it managed to regain its footing above RMB2,700/tonne by the end of Thursday's trading, said an analyst.

 

Analysts said China's soybean imports will sooner or later be affected if there are more outbreaks.

 

Soybean is crushed into soymeal and soyoil, two products for animal and human consumption.

 

The No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled lower.

 

Trading picked up slightly, thanks to more-active-than-usual buying and selling.

 

The Chinese government has agreed the Dalian exchange could set up more delivery warehouses in three cities - Nantonneg in Jiangsu province, Rizhao in Shandong province and Shenzhen in Guangdong province - according to local media reports.

 

Previously, delivery of GMO soybeans must be made in Dalian, in Liaoning province, a rule that discourages traders in other regions, especially in southern coastal provinces, to participate in the trading of the No. 2 contracts.

 

Fresh short selling drove the No. 2 May 2006 soybean contract down RMB22 to settle at RMB2,688/tonne. The contract traded between RMB2,676/tonne and RMB2,704/tonne.

 

Dalian's soymeal futures settled lower, tracking soybeans.

 

Despite some speculative buying, the benchmark May 2006 soymeal contract lost RMB19 to settle at RMB2,310/tonne, after trading between RMB2,298/tonne and RMB2,320/tonne.

 

Corn futures traded on the exchange settled mostly lower, but limited buying drove the September 2006 contract RMB2 higher to settle at RMB1,278/tonne. It traded between RMB1,272/tonne and RMB1,280/tonne.