February 7, 2006

 

Tuesday: China soybean futures settle down; corn up in active trade

 

 

Soybean futures on China's Dalian Commodity Exchange settled lower Tuesday on long liquidation as investors rushed to buy corn futures.

 

After tracking losses on the Chicago Board of Trade at the open, the benchmark May 2006 soybean contract moved in a narrow range. It finally settled RMB44 lower at RMB2,730 a metric tonne after trading between RMB2,716/tonne and RMB2,742/tonne.

 

The total trading volume for soybean futures on the exchange fell to 196,818 lots from 406,810 lots Monday. One lot is equivalent to 10 tonnes.

 

"Longs decided to leave the market finally, seeing a better opportunity in corn, after trying to push up soybean for quite some time, in vain," said Liu Xinghua, an analyst with Great Wall Futures Co.

 

Shrinking trading volumes and open interest were also seen in most soy product contracts.

 

Most soymeal futures settled lower, with the benchmark May 2006 contract down RMB37 at RMB2,366/tonne, after trading between RMB2,345/tonne and RMB2,387/tonne.

 

Soyoil futures also settled lower. The benchmark September 2006 contract fell RMB60 to settle at RMB5,154/tonne, after trading between RMB5,110/tonne and RMB5,176/tonne.

 

"Technically speaking, it's a correction from Monday's sharp increase. Looking at fundamentals, demand for these products usually drops after the Chinese New Year," Liu said.

 

Dalian's No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled mixed.

 

The benchmark September 2006 No. 2 soybean contract settled RMB27 lower at RMB2,638/tonne, after trading between RMB2,621/tonne and RMB2,686/tonne.

 

Meanwhile, corn futures were a draw after most contracts hit all-time highs Monday.

 

The benchmark September 2006 contract opened lower on the CBOT losses, but soon entered positive territory with new buying from long position holders. It rose RMB15 to settle at RMB1,508/tonne, after trading between RMB1,468/tonne and RMB1,538/tonne.

 

The total open interest for corn futures rose 129,712 lots to 731,582 lots Tuesday.

 

Analysts say fundamentals for corns are positive, with prices have been pushed up by purchases by long position holders since the end of 2005.