December 22, 2005

 

Thursday: China soybean futures settle higher on CBOT gains; corn up

 

 

Soybean futures on China's Dalian Commodity Exchange settled higher Thursday, recouping Tuesday's losses as Chicago Board of Trade soybeans ended up overnight and maintained an upbeat tonnee during Asian trading hours.

 

The benchmark settled RMB36 higher at RMB2,756 a metric tonne, after trading in a tight band of RMB2,744-RMB2,765/tonne.

 

The total trading volume in soybean futures declined to 346,882 lots from 373,130 lots Wednesday, with the benchmark contract accounting for nearly 94% of trades.

 

One lot is equivalent to 10 tonnes.

 

Both long and short position holders were seen exiting the benchmark May 2006 soybean contract, as they sought to limit their exposure in a market that has seen volatile trading in recent days, some analysts said.

 

"The rebound (in the benchmark since early this month) was forceful but the benchmark could meet tough resistance in a range of RMB2,760-RMB2,790/tonne," said an analyst with a futures trading company. "More consolidations in the local benchmark are likely if funds don't push up CBOT soybeans in the near term."

 

However, analysts said local traders are still focusing on soymeal futures, which have witnessed unusually high trading volumes since last week.

 

Since the holiday season is approaching and bird flu outbreaks in China have eased this month, some traders are betting on a recovery in soymeal demand.

 

Meanwhile, others haven't been so optimistic because fundamentals have been mostly bearish since last year.

 

Analysts said speculation in soymeal futures, despite being rampant in the past few days, abated a little Thursday as some speculators began reducing their exposure before the market closed.

 

By the close, the benchmark May 2006 soymeal futures contract settled RMB35 higher at RMB2,373/tonne after trading between RMB2,355/tonne and RMB2,389/tonne.

 

"The benchmark soymeal contract will face upside pressure if it breaches its resistance at RMB2,400/tonne, because soybean crushers are expected to add short positions after that," said a Beijing-based analyst.

 

"On the downside, it will be supported at RMB2,200/tonne," she added.

 

Trading volume in soymeal futures totaled 928,892 lots, similar to Wednesday's 928,444 lots and close to Monday's record high of 957,900 lots.

 

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

 

The most heavily traded September 2006 No. 2 soybean contract settled RMB45 higher at RMB2,703/tonne, after trading between RMB2,680/tonne and RMB2,744/tonne.

 

Corn futures traded on the exchange also settled higher, mostly on some speculative buying.

 

The most widely held September 2006 contract settled RMB7 higher at RMB1,349/tonne, after trading between RMB1,344/tonne and RMB1,357/tonne.