February 5, 2009
Thursday: China soy futures inch up on drought-driven supply fears
Soybean futures rose amid mixed results among agricultural futures on the Dalian Commodity Exchange Thursday, as an increase in prices on drought-driven supply concerns was tempered by weaker counterparts on the Chicago Board of Trade.
The benchmark September 2009 soybean contract gained 0.5% to settle at RMB3,482 a metric tonne.
Central and provincial authorities declared drought and emergency alerts Wednesday, and traders saw sufficient supply concerns to push prices slightly higher.
Analysts had mixed views on the drought, however. Some discounted the drought scares, saying they are always seen around this time of year, but others disagreed.
"We feel it's going to be severe," said Monica Tu, of Shanghai JC Intelligence. "If it persists, it could affect 10% of this year's wheat crop."
The effect on soybean and corn remained unclear, Tu said, since the planting season for the two crops hasn't begun yet.
Some 60% of wheat farm lands have been hit by the drought, she said.
More downside remained for soybeans, as there was still a gap between spot prices of the local product and cheaper imports of around RMB50 a metric tonne.
The agricultural complex has generally been stabilizing, though there may be sharper market movements once more traders return after the 15-day Lunar New Year period ends this weekend, Tu said.
In Chicago, corn led the complex lower Wednesday, leading Dalian corn down marginally Thursday.
Soymeal and palm oil futures settled lower, while soyoil futures made gains.
Cash domestic soybean prices in Heilongjiang, a major producing province, were slightly higher at RMB3,500/tonne, Tu said.
Thursday's settlement prices in yuan a metric tonne for benchmark contracts and volume for all contracts in lots (One lot is equivalent to 10 tonnes):
Contract Settlement Price Change Volume
Soybean Sep 2009 3,482 Up 17 417,434
Corn May 2009 1,585 Dn 6 75,830
Soymeal May 2009 2,695 Dn 24 560,842
Palm Oil May 2009 5,184 Dn 16 160,934
Soyoil May 2009 6,220 Up 18 447,410
