Monday: China soy futures settle down; government sale plan weighs
China's soy futures traded on the Dalian Commodity Exchange settled lower Monday, tracking concerns over the government's readiness to sell oilseeds to curb a rise in vegetable oil prices.
The benchmark September 2010 soy contract settled RMB40 lower at RMB3,969 a metric tonne, or down 1.0%.
Local vegetable oil cash prices have been rising recently; an official said in a television interview over the weekend the government was ready to "sell soy, rapeseed or rapeseed oil" to stabilize market prices.
"We are very confident (that we can guarantee market supply)," said Zhou Guanhua, a vice department chief with the State Administration of Grain.
Soy, soyoil and palm oil futures fell steeply at the start of the session following the news, but the decline soon stopped and some of the losses were recovered in the afternoon session.
"The government's intention is very clear and it curbed the scope for prices to rise," said Xu Zhimou, an analyst with Ruida Futures Brokerage.
The rise in other markets such as equities limited the decline, but the recovery was mostly due to short sellers squaring positions, Xu said. Few new long positions were opened, showing the market lacked confidence, he added.
Analysts said the market will likely consolidate in the near term, as the government's soy purchase policy will help prices stabilize.
The trading volume of all soy contracts rose to 664,606 lots from 530,376 lots Friday.
The open interest fell 11,512 lots to 401,848 lots Monday.
Corn, soymeal, palm oil and soyoil futures all settled lower.
Monday's settlement prices in yuan a tonne for benchmark contracts and volume for all contracts in lots (one lot is equivalent to 10 tonnes):
Product Contract Settlement Change Volume
Price
Soy Sep 2010 3,969 Down 40 664,606
Corn Sep 2010 1,861 Down 3 151,582
Soymeal Sep 2010 2,927 Down 26 1,521,140
Palm Oil Sep 2010 6,818 Down 94 415,034
Soyoil Sep 2010 7,796 Down 102 1,368,398
