Wednesday: China soy futures settle down; funds continue to exit

 

 

Soy futures settled lower on the Dalian Commodity Exchange Wednesday as funds continued to exit the market amid a lack of fresh fundamental cues and uncertainty ahead of key U.S. data due for release later this month.

 

The stronger U.S. dollar overnight, and weaker U.S. soy futures, also weighed on the market.

 

Prices are likely to remain supported around current levels until the U.S. Department of Agriculture releases its report at the end of the month, traders said.

 

The benchmark September 2010 soy contract settled down RMB20 or 0.5% at RMB3,860 a metric tonne. The market opened lower and remained in negative territory for the whole session.

 

The benchmark soy contract on the Chicago Board of Trade traded mildly lower overnight, and market participants in China were unwilling to buy or sell aggressively ahead of the USDA's report.

 

The persistent drought in southwestern China is doing little to boost prices for agricultural products as the area isn't a major crop-producing region, although it has helped vegetable oil prices somewhat since it may result in a drop in rapeseed output of 500,000 tonnes, or 3.7% of last year's total output, the China National Grain and Oils Information Center said in a note Wednesday.

 

Rapeseed grown in the drought-hit Guizhou and Yunnan provinces accounted for 7.3% of China's total output of 13.7 million tonnes in 2009.

 

The Office of State Flood Control and Drought Relief Headquarters expects the drought to expand further and affect spring planting.

 

Trading volume of all soy contracts declined to 143,632 lots from 219,050 lots Tuesday.

 

Open interest fell 150 lots to 341,522 lots Wednesday.

 

Corn, soyoil, soymeal and palm oil futures all settled lower.

 

Wednesday'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):

 

Product   Contract  Settlement Price  Change     Volume

Soy        Sep 2010      3,860        Dn   20    143,632

Corn       Sep 2010      1,906        Dn    5     41,134

Soymeal  Sep 2010      2,815        Dn   18    566,894

Palm Oil  Sep 2010      6,886        Dn   30    285,160

Soyoil     Sep 2010      7,500        Dn   14    388,232