Tuesday: China soy futures settle down; cautious ahead of USDA report

 

 

Soy futures traded on the Dalian Commodity Exchange settled a tad lower Tuesday, as investors were cautious ahead of the U.S. Department of Agriculture report to be issued later in the global day.

 

The benchmark September 2010 soy contract settled down a marginal RMB5, or 0.1%, at RMB3,807 a metric tonne.

 

Trading was very light because of the need to avoid risks ahead of the USDA report and week-long Lunar New Year holiday that starts in China on Saturday.

 

In the report, traders and analysts will focus on the USDA's estimate for South America soy output, as most expect the estimate to rise, Tianma Futures Co. analyst Xu Wenjie said.

 

In domestic news, China Grain Reserves Corp. plans to sell 208,400 tonnes of soy from reserves soon to make way for crop rotation, but analysts said there will be little interest from the market.

 

The South American harvest will make global soy much cheaper than local varieties, so the government will need to provide sufficient subsidies to attract buyers, they said.

 

Looking ahead, agricultural products prices will be under increasing downward pressure, as the high prices caused by ample cash liquidity have damped buying interest, said Gao Yanrong, an analyst with Dalu Futures Co., adding that with liquidity now tightening any further upward movement in prices would be limited.

 

Trading volume of all soy contracts declined to 147,514 lots from 233,688 lots Monday.

 

Open interest fell 4,408 lots to 358,714 lots Tuesday.

 

Corn futures settled marginally lower, while soyoil futures and palm oil futures settled slightly higher, and soymeal futures settled unchanged.

 

Following are Tuesday'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

Soy        Sep 2010      3,807        Dn    5    147,514

Corn       Sep 2010      1,847        Dn    3     43,854

Soymeal Sep 2010      2,752        Unch       484,126

Palm Oil  Sep 2010      6,770        Up    4    353,860

Soyoil     Sep 2010      7,376        Up   18    339,186