April 15, 2005

 

Friday: China soybean futures end lower in rangebound trading

 

 

Soybean futures traded on China's Dalian Commodity Exchange settled lower in rangebound trading Friday, taking their cue from overnight trading in soybean futures on the Chicago Board of Trade.

 

The benchmark September 2005 contract fell RMB29 a metric ton to settle at RMB3,024/ton, after trading in a tight range of RMB3,013-RMB3,034/ton.

 

For the week, the benchmark lost RMB70/ton.

 

The benchmark consolidated in a range of RMB3,020-RMB3,100/ton this week, fluctuating mainly due to light selling or buying from short-term players.

 

However, analysts said downside momentum is gathering, as pressures from fundamentals have reemerged.

 

Domestic demand for soy products has been sluggish in recent months, but imported soybean supply remains ample.

 

An initial estimate in the market is that China imported more than 2 million tons of soybeans in March and will import more than 1.3 million tons in April, resulting in a supply of more than 3 million tons in April, compared with estimated demand of around 2.2 million tons each month.

 

After this, "cheaper South American soybeans will rush in from the month of May, putting more pressure on the market," said a Dalian-based analyst. "Benchmark CBOT soybean futures may fall below a key price of $6.00 a bushel next week if more funds leave the market," a Beijing analyst said. "If so, benchmark soybean futures on Dalian may easily fall through RMB3,000/ton and may even go down to next support at RMB2,866/ton."

 

Trading volume in the Dalian soybean futures market fell to 232,906 lots from Thursday's 255,386 lots. One lot is equivalent to 10 tons.

 

The No. 2 soybean contracts, which can be delivered with soybeans harvested from genetically modified crops, settled mostly lower. The September 2005 No. 2 contract gave up RMB10 to settle at RMB3,018/ton, after trading between RMB3,011 and RMB3,031/ton.

 

Trading volume for No. 2 soybeans totaled 732 lots, slightly higher from Thursday's 458 lots. Open interest fell to 3,064 lots from 3,292 lots Thursday.

 

Dalian's soymeal futures settled lower, with the benchmark August 2005 soymeal contract falling RMB15 to settle at RMB2,554/ton, after trading between RMB2,538 and RMB2,565/ton.

 

Corn futures traded on the exchange settled mostly higher in thin trading amid a lack of trading leads.

 

The benchmark September 2005 corn contract inched up RMB2 to settle at RMB1,326/ton, after trading in a narrow range of RMB1,323-RMB1,329/ton.

 

China's futures trading is off limits to foreign investors.