December 27, 2007

 

Thursday: China soybean futures settle up on new CBOT highs

 

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Thursday, driven up by fresh 34-year highs on the Chicago Board of Trade overnight.

 

The benchmark September 2008 soybean contract settled RMB70 higher at a record RMB4,694 a metric tonne.

 

"This is a historical breakthrough for agricultural products" due to the depreciation of the U.S. dollar, said Wang Xiaoguang, an analyst at Galaxy Futures, who expects benchmark March soybeans on CBOT to break through their all-time high of US$12.90 a bushel sometime during the next 20 sessions.

 

March soybeans soared 40 1/4 cents to US$12.39 1/2 a bushel on CBOT overnight.

 

Vegetable oil futures also surged, supported by the overnight rally in CBOT soyoil and a rise in crude palm oil futures on Malaysia's derivatives exchange.

 

Market participants said tight domestic supply of edible oil is the crucial reason behind vegetable oil's recent surge.

 

But profit-taking set in during the session, as traders preferred to cash in ahead of the New Year holiday.

 

If the sales volume of cash soymeal increases, a further rise in soyoil is likely to be capped, said Tianqi Futures.

 

Analysts said the government's tightening policies could also pressure the market in the near term as policy makers tried to keep food prices under control ahead of the Lunar New Year.

 

The Ministry of Commerce said Thursday it has released state-reserved meat in some areas and will "guarantee the basic stability" of grain and edible oil prices.

 

Some analysts expect the government to release 100,000 to 150,000 tonnes of soyoil in January to meet market demand.

 

Palm oil futures, soyoil futures and soymeal futures settled higher, while corn futures settled mostly lower.

 

The government is able to control corn prices through the release of corn from state reserves, said Dong Shuangwei, an analyst at Capital Futures.

 

China has sold around 426,000 tonnes of corn so far this month, or 28% of the 1.5 million tonnes it planned to sell.

 

Thursday's settlement prices in yuan a metric tonne and the volume for all contracts in lots. (One lot is equivalent to 10 tonnes) :

 

                Contract      Settlement Price  Change     Volume

Soybeans  Sep 2008      4,694         Up     70           815,762

Corn         May 2008      1,711         Dn     12           544,632

Soymeal    Sep 2008      3,400         Up     22         1,006,608

Palm Oil    May 2008      9,376         Up    198           18,836

Soyoil       May 2008     10,306         Up   160          202,826