March 10, 2008

 

Monday: China soy futures tumble on CBOT fall, reserves sales talk

 

 

Soy futures traded on the Dalian Commodity Exchange mostly closed at 4% limit-downMonday, with the complex weighed down by a speculative selloff in soyoil futures on the back of a tumble in soy futures on the Chicago Board of Trade Friday and market talk of government intervention.

 

The benchmark January 2009 soybean contract fell RMB172 to settle at RMB4,462 a metric tonne, while the benchmark September soyoil contract settled RMB508 lower at RMB12,212/tonne.

 

"The price surge last month points to a correction, and Friday's CBOT losses as well as market talk of government intervention provide a chance," said Zeng Xuezhou, an analyst at Beite Futures.

 

The market is abuzz with talk the government will release part of the soyoil reserves to rein in high prices and increase supply.

 

The National Development and Reform Commission said Monday on its Web site local governments should release edible oil reserves in areas experiencing tight supply.

 

It didn't indicate the amount the government plans to sell to crushers or provide other details.

 

"It seems there's more downside left, as the CBOT charts don't look good," said a trader in Beijing, adding initial support for the September soyoil contract could be RMB11,500/tonne.

 

"It should be a quick and sharp correction, and the timing would be good, now that curbing price rise is one of the focuses of the ongoing CPPCC and NPC (meetings)," Zeng said.

 

Preliminary data provided by the General Administration of Customs Monday showed the country's February soybean imports totaled 2.02 million tonnes, 71% higher on year.

 

Palm oil and corn futures also settled lower Monday, weighed down by soy futures losses.

 

Monday's settlement prices in yuan a metric tonne and volume for all contracts in lots:

 

                  Contract      Price      Change     Volume

Soybeans    Jan 2009      4,462      Dn 172    307,594

Soymeal     Sep 2008      3,463      Dn 129    486,376

Soyoil         Sep 2008     12,212      Dn 508      4,230

Corn          Sep 2008      1,808      Dn  36  1,149,584

Palm Oil     May 2008     11,194      Dn 466        286