November 18, 2005

 

Friday: China soybean futures settle down; bird flu worries persist

 

 

China's Dalian Commodity Exchange soybean futures settled lower for a fourth consecutive trading day Friday, dragged down by a mix of short selling and long liquidation amid persistent worries over bird flu.

 

Late Thursday, the Ministry of Agriculture said on its Web site that two new outbreaks of bird flu in poultry had been confirmed in central Hubei province and the northwestern Xinjiang autonneomous region, places that had reported the disease before.

 

China has now reported 13 bird flu outbreaks nationwide since Oct. 19, with two people being confirmed to have died from the disease.

 

The repeated outbreaks of bird flu have hit the poultry and feed sectors, with prices as well as output falling in many regions.

 

Soybean and soymeal prices in the cash market have also been affected.

 

Soybean prices in Heilongjiang, China's largest soybean producing province, are currently around RMB2,380-RMB2,460 a metric tonne, down from RMB2,440-RMB2,500 a month ago. Meanwhile, local soymeal prices have fallen to RMB2,260/tonne from RMB2,400/tonne during the same period.

 

Soymeal, a product crushed from soybeans, is mostly used to make feed products. Soyoil, the other product from soybeans, is for human consumption.

 

At the close, the benchmark May 2006 soybean contract had fallen RMB19 to settle at RMB2,682/tonne after hitting RMB2,663/tonne, its lowest level in more than eight months. Its intraday high was at RMB2,705/tonne.

 

"The market is in a downtrend now. More losses wouldn't be surprising," said an analyst with a futures trading company.

 

Total trading volume for soybean futures rose to 371,782 lots from 263,672 lots Thursday. One lot is equivalent to 10 tonnes.

 

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

 

The most actively traded No. 2 May 2006 soybean contract lost RMB16 to settle at RMB2,672/tonne, after trading between RMB2,650 and RMB2,689/tonne.

 

Dalian's soymeal futures settled lower on both long liquidation and short selling, with the benchmark May 2006 soymeal contract shedding RMB16 to settle at RMB2,294/tonne, after hitting its lowest level in more than eight months at RMB2,280/tonne. Its intraday high was at RMB2,316/tonne.

 

Corn futures traded on the exchange settled mostly flat after larger-than-usual losses in the past few days.

 

The most heavily traded September 2006 contract settled flat at RMB1,278/tonne, after trading between RMB1,276 and RMB1,283/tonne.