December 11, 2009

 

Friday: China soy futures settle up; correction of earlier decline

 

 

China's soy futures traded on the Dalian Commodity Exchange settled higher Friday, in a correction of sharp declines in the previous two sessions, but further gains could be limited with imports up in November and likely to rise further.

 

The benchmark September 2010 soy contract settled RMB13 a tonne higher at RMB4,009/tonne, or up 0.3%.

 

The contract opened at RMB4,000/tonne, and consolidated between RMB3,993 and RMB4,024/tonne during the session, after falling below the RMB4,000/tonne support level Thursday.

 

A U.S. Department of Agriculture supply and demand report issued overnight was largely within the market's expectations, and didn't give clear trading guidance, analysts said.

 

DCE soys are supported by government buying, but they are also pressured by arbitrage selling from local cash market buyers, Galaxy Futures said in an analytical note.

 

Chicago Board of Trade soys are also struggling to make headway towards resistance levels, and there will be increasing pressure on DCE prices from rising imports.

 

"It is difficult for the (benchmark CBOT) soy contract to break through US$10.70 a bushel, so DCE soys will find it difficult to rise above RMB4,160/tonne," Guangfa Futures analyst Yuan Jianbin said.

 

China's soy imports in November were down 13% on year but rose 15% on month to 2.89 million tonnes, according to data from the General Administration of Customs Friday.

 

Market participants expect imports to recover further in the coming months due to year-end demand, with monthly imports likely above 4 million tonnes.

 

Trading volume of all soy contracts declined to 530,376 lots from 761,586 lots Thursday.

 

Open interest rose 226 lots to 413,360 lots Friday.

 

Corn futures settled lower, while soymeal futures, palm oil futures and soyoil futures all settled higher.

 

Following are Friday's settlement prices in yuan a 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         4,009         Up   13           530,376

Corn                 Sep 2010         1,864         Dn    3           137,380

Soymeal           Sep 2010         2,953         Up    2         1,070,754

Palm Oil            Sep 2010         6,912         Up   72           360,648

Soyoil               Sep 2010         7,898         Up   32        1,054,026