November 30, 2005

 

Wednesday: China soybean futures settle higher on bargain hunting

 

 

China's Dalian Commodity Exchange soybean futures settled mostly higher Wednesday as bargain hunting emerged following five straight trading days of declines on worries over bird flu.

 

The benchmark May 2006 soybean contract rose RMB19 to settle at RMB2,543 a metric tonne, after trading between RMB2,512 and RMB2,578/tonne.

 

After opening lower, the benchmark entered positive territory by the end of the first 30 minutes of trading, supported by some fresh speculative buying.

 

The benchmark stayed above its previous settlement price for the rest of the day, as selling was mostly offset by a mix of short covering and some long buying.

 

Concern over bird flu has more or less eased, as the government has offered to help the poultry sector through measures such as reducing taxes and extending loans, analysts said.

 

In addition, the government hasn't reported any new outbreaks in the past 24 hours.

 

But analysts doubted that a rebound in the local market is imminent, as more outbreaks of the disease are still likely.

 

"Like the government said, the disease isn't easy to control," said one analyst. "Risks are still there."

 

Bird flu kills poultry and in turn weakens the feed industry.

 

Total trading volume for soybean futures decreased to 378,752 lots from 419,296 lots Tuesday. One lot is equivalent to 10 tonnes.

 

Dalian's No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops but are seldom traded, settled mostly higher.

 

But the No. 2 May 2006 soybean contract settled flat at RMB2,520/tonne, after trading between RMB2,510 and RMB2,535/tonne.

 

Soymeal futures traded on the exchange settled mostly higher, with active bargain hunting seen on the benchmark May 2006 contract.

 

The benchmark soymeal contract rose RMB19 to settle at RMB2,156/tonne, after trading between RMB2,124 and RMB2,185/tonne.

 

Corn futures traded on the exchange settled slightly higher, encouraged by gains in soy futures.

 

The most heavily traded September 2006 contract settled RMB3 higher at RMB1,278/tonne, after trading between RMB1,273 and RMB1,284/tonne.