Monday: China soy futures settle up sharply; inflation expected
Soy futures traded on the Dalian Commodity Exchange settled sharply higher Monday amid expectations that high cash liquidity and continued government spending will push broad measures of inflation into positive territory next year and continue to drive commodities prices higher.
The benchmark September 2010 soy contract settled RMB55 a metric tonne higher at RMB3,882/tonne, or up 1.4%.
The contract opened higher, and broke through resistance at RMB3,900/tonne near the end of the session, touching RMB3,911/tonne, the highest level so far this year.
Analysts said the surge went against with the fundamentals of supply and demand, but may continue if there is no concrete negative news due to expectations of a return to inflation.
"Gains in agricultural products prices have lagged far behind the rise in other commodities (such as metals), and their value is underestimated," said a trader with a foreign trading house.
The rise on Chicago Board of Trade Friday and ample cash liquidity also helped to push up prices.
Chen Yanjun, an analyst with Zhengzhou Grain Wholesale Market, said she doesn't exclude the possibility of a further rise in the benchmark to more than RMB4,000/tonne.
A record-high spot gold price and a weakening dollar in Asian trading hours also sent commodities higher.
Trading volume of all soy contracts rose to 287,616 lots from 215,886 lots Friday.
Open interest rose 17,994 lots to 271,994 lots Monday.
Corn futures, soymeal futures, palm oil futures and soyoil futures all settled higher.
Following are Monday's settlement prices in yuan a metric tonne for benchmark contracts and volume for all contracts in lots (One lot is equivalent to 10 tonnes):
Contract Settlement Price Change Volume
Soy Sep 2010 3,882 Up 55 287,616
Corn May 2010 1,778 Up 12 179,976
Soymeal Sep 2010 2,976 Up 28 1,942,276
Palm Oil Sep 2010 6,692 Up 124 206,438
Soyoil Sep 2010 7,818 Up 130 957,852
