November 22, 2006
Wednesday: China soybean futures settle down after recent strong gains
Soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday on a combination of fresh short positions and long liquidation, following strong gains in previous weeks.
The benchmark May 2007 contract settled RMB32 lower at RMB2,919 a metric tonne, after trading between RMB2,886/tonne and RMB2,945/tonne.
Total trading volume rose to 271,816 lots from 228,434 lots Tuesday. One lot is equivalent to 10 tonnes.
"Short-selling on charts in the early session prompted profit-taking by longs later, as we have seen such strong gains since the beginning of the month," said Gao Yanrong, an analyst at Dalu Futures Co.
"We're likely to see further downward correction in the coming sessions," Gao said.
However, light buying in soy and corn futures in the late session pared their earlier losses, after wheat futures in the Zhengzhou Commodity Exchange hit limit-up in the afternoon, analysts said.
Dalian's soymeal and soyoil settled lower in line with soybean futures.
The benchmark May 2007 soymeal contract fell RMB19 to settle at RMB2,454/tonne, after trading between RMB2,436/tonne and RMB2,473/tonne.
The benchmark May 2007 soyoil contract gave up RMB81 to settle at RMB6,779/tonne.
Corn futures settled slightly lower, as losses in soy futures weighed on prices, despite strong fundamentals.
"With industrial processors in the northeast raising their purchase price again, market sentiment continues to be very bullish," said Xu Yulan, an analyst at Yong'an Futures Co.
The most active September 2007 contract settled RMB10 lower at RMB1,698/tonne, after trading between RMB1,673/tonne and RMB1,717/tonne.
Total trading volume for corn rose to 1,466,780 lots from 1,254,632 lots Tuesday.
"The bullish sentiment on the spot market has resulted in thin trade at the moment, amid high prices, and some traders have lowered their prices, which could trigger a correction in futures soon," said Dalu Futures Co.'s Gao.
