March 22, 2005

 

Tuesday: China soybean futures end lower; Corn up on more buying

 

 

Soybean futures traded on the Dalian Commodity Exchange settled lower for a fourth session Tuesday, pressured by the slump in soybean futures on the Chicago Board of Trade overnight.

 

The benchmark September 2005 soybean contract in Dalian dropped RMB30 a metric ton to settle at RMB3,048/ton, after trading between RMB3,003 and RMB3,078/ton.

 

After dipping to its intraday low minutes after the market opened, the benchmark quickly recovered on short-covering. However, long liquidation was also strong, slowing its gains.

 

Open interest on the benchmark shrank by 39,324 lots to 263,368 lots, shedding almost two-thirds of the 60,666 lots of new positions built Monday. One lot equals 10 tons.

 

"Short-term trading dominates the volatile market," said a Beijing-based analyst.

 

Before the declines seen over the past four trading days, local soybean futures had staged a six-day rally.

 

The trading volume for soybean futures in Dalian was 714,590 lots, down from Monday's 872,890 lots.

 

No. 2 soybean contracts, which can be delivered with soybeans harvested from genetically modified crops, also settled lower. The benchmark May 2005 No. 2 contract fell RMB30/ton to settle at RMB2,939/ton, after trading between RMB2,889 and RMB2,955/ton.

 

The trading volume for No. 2 soybeans totaled only 3,320 lots, down from 7,680 lots Monday.

 

Soymeal futures contracts in Dalian ended sharply lower, mimicking the trading in soybeans.

 

The benchmark August 2005 soymeal contract settled RMB43/ton lower at RMB2,672/ton after trading between RMB2,609 and RMB2,699/ton.

 

Soymeal futures usually rise or fall in tandem with soybeans but experience bigger percentage changes, as the smaller market is more easily dominated by speculative forces.

 

Corn futures contracts traded on the exchange settled mostly higher on more speculative buying after a rise Monday. Trading was active, hitting a record of 482,806 lots.

 

The benchmark July 2005 contract rose RMB19/ton to settle at RMB1,302/ton after trading between RMB1,280 and RMB1,313/ton.

 

There was talk in the market that China may export up to 8 million tons of corn this year on ample local supply and high ocean freight rates.

 

High freight costs are expected to undermine U.S. corn's competitiveness in the South Korean and Japanese markets.

 

However, China exported 119,673 tons of corn in February, down 73.0% on year. Corn export in the first two months totaled 605,092 ton, down 40.5%, the customs departments said Tuesday.

 

China exported 2.32 million tons of corn in 2004, down 85.8% from a year earlier.

 

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