November 20, 2007

 

Tuesday: China soybean futures settle sharply down CBOT, weak stock market

 

 

Soybean futures on the Dalian Commodity Exchange settled sharply lower Tuesday, following an overnight tumble on the Chicago Board of Trade.

 

Most contracts hit limit-down during the session as negative sentiment in the stock market spilled over into soybeans.

 

The benchmark September 2008 soybean contract settled RMB149 lower at 4,397 a metric tonne.

 

Total trading volume rose to 999,652 lots from 575,508 lots Monday. One lot is equivalent to 10 tonnes.

 

The futures market has close ties with the stock market, and funds are concerned about more monetary tightening policies, said Li Honglei, an analyst at Nanhua Futures.

 

A rise in food prices is the main cause of China's high consumer price index growth, which rebounded to 6.5% in October, matching August's almost 11-year high.

 

People's Bank of China Governor Zhou Xiaochuan said Monday that he didn't think it was necessary to raise interest rates too often but that further hikes in the coming months shouldn't be ruled out.

 

"We can use every type of monetary policy instrument, including interest rates," Zhou said.

 

Analysts said the downstream sector also can't afford too high prices as the recovery in feedmeal demand has been slow.

 

Palm oil futures and soyoil futures settled lower.

 

The benchmark May 2008 palm oil contract settled at RMB8,544/tonne, down RMB156 from Monday.

 

Total trading volume for all palm oil futures declined to 13,144 lots from 13,308 lots Monday.

 

The benchmark May 2008 soyoil contract settled RMB246 lower at RMB9,130/tonne.

 

An analyst with a foreign trading house in Shanghai said China is likely to import more vegetable oil towards the end of this year on strong demand and limited domestic supply.

 

Soymeal futures also tumbled, with most contracts settling lower.

 

The benchmark May 2008 soymeal contract settled RMB115 lower at RMB3,411/tonne.

 

Corn futures settled lower.

 

The benchmark May 2008 contract settled RMB29 lower at RMB1,723/tonne.

 

Total trading volume for all corn futures rose to 977,284 lots from 572,508 lots Monday.