November 23, 2005

 

Wednesday: China soybean futures settle lower; new bird flu outbreaks

 

 

China's Dalian Commodity Exchange soybean futures settled lower Wednesday, as the local market focussed new bird flu outbreaks after an uneventful session at the Chicago Board of Trade overnight.

 

The benchmark May 2006 soybean contract fell RMB12 to settle at RMB2,651 a metric tonne after reaching a fresh low in more than eight months at RMB2,642/tonne. Its intraday high was at RMB2,661/tonne.

 

Total trading volume for soybean futures rose to 249,544 lots from 159,498 lots Tuesday. One lot is equivalent to 10 tonnes.

 

Late Tuesday, the Ministry of Agriculture said on its Web site that three new outbreaks of bird flu have been confirmed in northern Ningxia, northwestern Xinjiang and southwestern Yunnan provinces, resulting in the killing of 177,356 fowls.

 

This brings the total reported outbreaks in the country to 24 so far this year, based on earlier state media reports.

 

However, a majority of the outbreaks occurred since last month.

 

Bird flu virus kills fowls and in turn undermines demand for soymeal and soybeans.

 

Analysts said given the frequent spread of the disease, the local market will likely move lower even if CBOT soybeans rise.

 

"Market confidence has been devastated (by bird flu)," said a Shanghai-based analyst. "The bearish trend won't be changed easily."

 

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 September 2006 soybean contract lost RMB22 to settle at RMB2,656/tonne, after trading between RMB2,634 and RMB2,677/tonne.

 

Dalian's soymeal futures settled lower, with the benchmark May 2006 soymeal contract losing RMB20 to settle at RMB2,256/tonne, after falling to RMB2,248/tonne, the lowest since March this year.

 

The intraday high for the benchmark was at RMB2,268/tonne.

 

Meanwhile, corn futures traded on the exchange settled mostly higher on moderate speculative buying, boosted by talk of higher-than-expected Chinese corn exports in recent weeks.

 

The most heavily traded September 2006 contract settled up RMB9 at RMB1,286/tonne, after trading between RMB1,281 and RMB1,292/tonne.