November 21, 2006

 

Tuesday: China soybean futures settle mostly down on higher supply

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Tuesday, pressured by growing supplies on the spot market.

 

The most active May 2007 contract settled RMB21 lower at RMB2,951 a metric tonne, after trading between RMB2,920/tonne and RMB2,982/tonne.

 

Total trading volume fell to 228,434 lots from 302,148 lots Monday. One lot is equivalent to 10 tonnes.

 

"Farmers and grain traders in soybean producing regions have stepped up selling of soybeans in a rush to take advantage of the current high prices, increasing supplies on the market," said Gao Yanrong, an analyst at Dalu Futures Co.

 

"Profit-taking was seen in the late session, further pressuring (soybean) futures prices," he added.

 

"The overnight rises in soybean futures on the Chicago Board of Trade were not as high as expected, weighing on market sentiment," said Zhang Yifan, a trader at China Grains & Oils Group Feed Corp.

 

Soymeal futures settled mostly lower as well. The benchmark May 2007 soymeal contract fell RMB29 to settle at RMB2,473/tonne, after trading between RMB2,455/tonne and RMB2,502/tonne.

 

Total trading volume dropped to 281,686 lots from 336,738 lots Monday.

 

"Soyoil prices soared on the spot market this week, pressuring soymeal futures," Zhang said.

 

"Crushing companies increased production of soyoil lately, propelled by the current high prices. Output of soymeal rose accordingly, pressuring soymeal prices," Zhang added.

 

Soyoil and soymeal are derived from the crushing of soybeans.

 

Soyoil futures settled mostly up. The most active May 2007 soyoil contract settled RMB131 higher at RMB6,860/tonne.

 

"The surge in soyoil prices on the spot market this week provided solid support to (soyoil) futures," Zhang said.

 

Prices of soyoil of average quality were quoted around RMB7,200/tonne across China, up RMB800 from a week earlier.

 

Corn futures settled mostly lower. The benchmark May 2007 contract settled down RMB5 at RMB1,594/tonne, after trading between RMB1,585/tonne and RMB1,605/tonne.

 

Total trading volume for corn rose to 1,254,632 lots from Monday's 1,142,888 lots.

 

"Corn prices fell a tad on the spot market this week, pressuring (corn) futures to some extent," Gao said.

 

However, "losses are not expected to last for long as the bullish sentiment in the market has not changed," he added.