December 27, 2005

 

Tuesday: China soybean futures settle up; soymeal volume hits high

 

 

Soybean futures on China's Dalian Commodity Exchange settled higher Tuesday, but most contracts gave up some gains in the last hour of trading because trading volume fell after long liquidation earlier in the day.

 

The benchmark May 2006 soybean contract settled RMB7 higher at RMB2,760 a metric tonne, after trading between RMB2,720/tonne and RMB2,784/tonne.

 

Total trading volume for soybean futures on the Dalian exchange increased to 456,072 lots from 102,242 lots yesterday. One lot is equivalent to 10 tonnes.

 

Soymeal futures settled higher, tracking gains in soybean futures.

 

The benchmark May 2006 contract settled RMB22 higher at RMB2,398/tonne, after trading between RMB2,357/tonne and RMB2,425/tonne.

 

Meanwhile, the total trading volume for soymeal futures climbed to a new record high of 1,085,206 lots, surpassing the record 957,900 lots on Dec. 17.

 

Long buyers took profits following late afternoon gains, said Liu Xinghua of Great Wall Futures.

 

"The high turnover suggests divergence between investors still exists, and such active trading in turn attracts more speculators," Liu said.

 

The market corrected lower late in the day, suggesting players remained cautious about CBOT's movements when trading resumes after Christmas, he added.

 

"While the market bottom is forming, it is a critical time for the change of the tendency of the local market now, both technically and fundamentally," Liu said.

 

Shorts still believe that there aren't any fresh fundamentals that can support such a high price, while long buyers think the desirable CBOT trend will stimulate the local market, which remains sluggish due to bird flu disease in the previous months.

 

"Tonneight's CBOT trading will largely determine not only tomorrow's local market, but a midterm trend," said Han Yan of Dalu Futures Co.

 

If the CBOT ends higher, then the local market will probably be able to open above the resistance tomorrow. Otherwise, the market may revert to sluggish trading, Han said.

 

The trading of Dalian's No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mostly higher.

 

The most heavily traded September 2006 No. 2 soybean contract settled unchanged at RMB2,756/tonne, after trading between RMB2,713/tonne and RMB2,775/tonne.

 

Corn futures traded on the exchange settled mostly higher in active trading.

 

The most widely held September 2006 contract rose RMB13 to settle at RMB1,384/tonne, with a trading volume of 379,304 lots, after trading between RMB1,372/tonne and RMB1,393/tonne.

 

Corn futures have been more active in recent days, with trading volume reaching 372,992 lots yesterday, compared with 269,008 lots Friday.

 

"Farmers were reluctant to sell in view of a likely increase in prices with the fast-approaching Lunar New Year, which usually strains the railway system's capacity," said Gao Yanrong, of Dalu Futures Co.