December 12, 2006

 

Tuesday: China soybean futures settle higher on CBOT; corn rises

 

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, thanks to overnight gains in Chicago Board of Trade soybean futures.

 

The benchmark May 2007 contract rose RMB26 to settle at RMB2,859 a metric tonne, after trading between RMB2,846/tonne and RMB2,870/tonne.

 

Total trading volume rose to 101,182 lots from 59,840 lots Monday.

 

One lot is equivalent to 10 tonnes.

 

There was some buying on the heels of gains in corn futures and overnight gains at CBOT, said Zeng Xuezhou, an analyst at Beite Futures Co.

 

"Otherwise, I don't think soybean can be so attractive, as CBOT is still in the process of a downward correction, which is likely to last until the end of the month," Zeng said.

 

However, analysts said if corn's uptrend continues, soy products will continue to benefit, as its crushed products can be used to substitute corn in animal feed production.

 

Soymeal futures settled slightly higher, but lagged soybean gains due to weak demand, analysts said.

 

The benchmark May 2007 soymeal contract settled RMB10 higher at RMB2,333/tonne, after trading between RMB2,325/tonne and RMB2,342/tonne.

 

Dalian's soyoil futures settled higher on speculative buying in line with soybean's rise, although profit-taking by longs late in the session pared earlier gains, analysts said.

 

The benchmark May 2007 soyoil contract rose RMB158 to settle at RMB6,762/tonne.

 

Corn futures settled higher thanks to strong cash values, with short covering driving up near-month contract prices, analysts said.

 

The most active September 2007 contract settled RMB27 higher at RMB1,711/tonne, after trading between RMB1,695/tonne and RMB1,721/tonne.

 

Trading volume for all corn contracts rose to 1,470,588 lots from 952,324 lots Monday.

 

Both longs and shorts were seen opening new positions in the May 2007 contract, "indicating a split outlook for corn," said Xu Yulan, an analyst at Yong'an Futures Co.

 

Some market participants cast doubts on the government's corn production and inventory data, as they think the market is tighter than what the data indicates, while others believe the high prices were largely due to speculative buying and can't be sustained, traders said.

 

"We might see some downward correction by the end of the month, as chart patters show," Zeng said.