February 27, 2008

China's Dalian soy futures lose momentum Tuesday on bird flu alert

Dalian soy futures slowed on Tuesday, after posting gains since late January, as news of bird flu rattled investors and impacted Chicago dragged from all-time highs.

An outbreak of bird flu will cut the demand for soymeal used in livestock feed, which in turn will reduce China's soy imports.

The most active May soyoil future was RMB44 to RMB13,028 per tonne, after touching a contract high of RMB13,540 earlier in the day.

The turnaround in Dalian soy complex dragged down Chicago soy futures which had risen early in Asia. The front March was down 18 cents at US$14.34 by 0745 GMT.

Late Monday, state media reported a bird flu outbreak in poultry in the southwestern province of Guizhou, when a woman in the south of the country also died from bird flu.

The poultry outbreak, which was first detected on February 17 in the city of Zunyi, had killed 3,993 birds and prompted the culling of more than 238,000 birds, Xinhua said.

Meanwhile, a Shanghai trader pointed that soymeal demand is not as good as expected, especially after the snowstorms.

Still, the traders said strong fundamentals for oils had not changed in China. They said some crushers had sold Dalian soyoil futures to lock in profits after a strong rally since January 28.

May soyoil contract jumped nearly 25 percent to end at an all-time high of RMB13,188 on Monday.

US$1 = RMB7.15 as of February 27, 2008