December 12, 2005

 

Monday: China soybean futures surge on CBOT; bird flu worries ease

 

 

Soybean futures on China's Dalian Commodity Exchange settled sharply higher as speculative long buying emerged after Chicago Board of Trade soybeans rose Friday and continued to surge in Monday's electronic trading.

 

The benchmark May 2006 soybean contract rose RMB47 to settle at RMB2,630 a metric tonne, after trading between RMB2,595 and RMB2,648/tonne.

 

The total trading volume for soybean futures on the Dalian exchange rose to 502,782 lots from 291,910 lots Friday. One lot is equivalent to 10 tonnes.

 

Analysts said local players were encouraged by Friday's gains in CBOT soybeans and their continued rise during Asian hours.

 

In addition, China hasn't reported any new outbreaks of bird flu in poultry this month, a situation which analysts said triggered some buying.

 

The country reported 25 outbreaks of bird flu in October and November, which hurt the domestic soy and corn markets.

 

Poultry breeding is expected to recover to some extent ahead of the Chinese Spring Festival holidays which start in late January, and this may have helped provide a boost to the market, according to Yuan Bei, an analyst with Dalian Northern Futures.

 

But Yuan said the local market is more likely to consolidate in recent ranges than reverse its downside trend for the time being, despite Monday's surge.

 

"We are watching whether benchmark CBOT January soybeans can breach a key level of $5.80 a bushel," she said.

 

An analyst with China CIFCO Futures said he expects the local market to trend higher in the near term on some follow-through buying.

 

"The benchmark May 2006 contract (on Dalian) is likely to test RMB2,680/tonne Tuesday, but further ahead, it will meet strong resistance at RMB2,700-RMB2,750/tonne."

 

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

 

The most heavily traded No. 2 September 2006 soybean contract settled RMB38 lower at RMB2,606/tonne, after trading between RMB2,581 and RMB2,629/tonne.

 

Soymeal futures traded on the exchange settled sharply higher, mostly on short-term speculative buying, analysts said.

 

The benchmark May 2006 soymeal contract gained RMB55 to settle at RMB2,254/tonne, after trading between RMB2,218 and RMB2,278/tonne.

 

Corn futures traded on the exchange settled higher, with the most widely held September 2006 contract rising RMB15 to settle at RMB1,332/tonne, after trading between RMB1,324 and RMB1,340/tonne.