Tuesday: China soy futures settle down; correcting Monday's surge
Soy futures traded on the Dalian Commodity Exchange settled lower Tuesday, as commodities and equities fell in a correction of recent gains.
The benchmark September 2010 soy contract settled RMB10 a metric tonne lower at RMB3,872/tonne.
The contract opened higher and rose to an intraday high of RMB3,903/tonne, but gradually eased into negative territory around noon.
"It's a correction of yesterday's big rise, and the prices may continue to fall if there is more negative news," said Zheng Jianlin, an analyst with Wanda Futures.
On Monday, the contract broke through resistance at RMB3,900/tonne, touching RMB3,911/tonne, the highest level so far this year, due to concerns about the trends in next year's inflation.
Open interest also fell, signalling that some funds have decided to head for the exits after Monday's rally.
Investors are aware that the government has the ability to step in and sell soy from its large reserves if prices rise above RMB4,000/tonne, Zheng said.
The government said it will stop its weekly soy sales as of December. Analysts said the government's intention is to help farmers sell the new crop at better prices.
Trading volume of all soy contracts declined to 222,972 lots from 287,616 lots Monday.
Open interest fell 16,342 lots to 255,652 lots Tuesday.
Corn futures settled marginally higher, soymeal futures settled unchanged, while palm oil futures and soyoil futures settled lower.
The following are Tuesday'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 3,872 Dn 10 222,972
Corn May 2010 1,780 Up 2 151,530
Soymeal Sep 2010 2,976 Unch 2,260,672
Palm Oil Sep 2010 6,646 Dn 46 273,752
Soyoil Sep 2010 7,754 Dn 64 1,219,812
