November 22, 2005

 

Tuesday: China soybean futures settle mostly up on CBOT; slow trade

 

 

Most Dalian Commodity Exchange soybean futures settled slightly higher Tuesday after falling over the past five trading days, thanks to a small rise overnight in Chicago Board of Trade soybeans.

 

The benchmark May 2006 soybean contract gained RMB6 to settle at RMB2,663 a metric tonne after trading between RMB2,653 and RMB2,670/tonne.

 

However, total trading volume for soybean futures shrank to 159,498 lots from 272,036 lots Monday. One lot is equivalent to 10 tonnes.

 

Analysts said the local market took a breather and consolidated at recent lows after there weren't any reported bird flu outbreaks during the past 24 hours.

 

Previously, both soybean and soymeal futures on Dalian had repeatedly hit fresh multi-month lows due to frequent outbreaks of bird flu across the country in the past month.

 

The disease kills poultry and in turn undermines demand for soymeal and soybeans.

 

But Yin Chengjie, a vice agriculture minister, warned Monday it is still a tough job to curb bird flu outbreaks because the virus is intensifying and China's veterinary system is weak.

 

China has reported 21 bird flu outbreaks in nine provinces that have killed 144,624 fowls. As a result, the government had to cull another 21.18 million fowls to contain these outbreaks, according to state media reports.

 

Analysts said the local market is expected to continue to consolidate at recent lows in the short term, pegging technical resistance at RMB2,680/tonne for the local benchmark.

 

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 RMB8 to settle at RMB2,635/tonne, after trading between RMB2,630 and RMB2,669/tonne.

 

Dalian's soymeal futures settled mostly higher, but the gains were limited due to a lack of strong buying interest.

 

The benchmark May 2006 soymeal contract rose RMB4 to settle at RMB2,276/tonne, after trading between RMB2,270 and RMB2,284/tonne.

 

Corn futures traded on the exchange settled mostly higher, with the most heavily traded May 2006 contract settling up RMB5 at RMB1,241/tonne, after trading between RMB1,236 and RMB1,251/tonne.