April 30, 2009

Soy futures on China's Dalian Commodity Exchange rallied 2% Thursday, tracking a U.S. agricultural price bounce as the market began to shrug off fears the swine flu outbreak would escalate.

Market participants are also realizing China hadn't imported pork from Mexico even before a ban was enacted, an analyst said.

The benchmark January 2010 soy contract settled up RMB70 at RMB3,377 a metric tonne.

Analysts said a surge on the Chicago Board of Trade overnight and higher crude oil prices helped push domestic soys higher.

 

Soy oil and palm oil futures jumped Thursday, and some analysts said swine flu concerns could actually help support vegetable oil prices.

 

"If the flu really affects hog breeding and thus soy meal demand, it will in turn support vegetable oil" as processing plants will likely hike soy oil prices to compensate for losses from soy meal, said Xiao Jun, an analyst at Shanghai JCI, a commodities consultancy firm.

 

Palm oil futures rose 3.8% while soy oil futures were up 3.7%.

 

Meanwhile, traders appeared to have digested news of the swine flu outbreak so far, and the rise in external markets, including equities, helped support agricultural commodities, said analysts.

 

"CBOT's growth has taken back all losses due to the flu, with U.S. soy meal growing the most," said Li Xiaoli of Beite Futures.

 

In addition, she said, market participants are starting to realize the ban against Mexican pork was largely cosmetic.

 

"We do not import any pork from Mexico, so the pork ban does not have much impact on our country," Li said. "(The government's ban) has more to do with managing attitudes. The departments involved have to show leadership."

 

France, Denmark, Brazil and the U.S. are among the country's top suppliers.

 

Corn and soy meal futures posted gains as well tracking the CBOT.

 

Thursday'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):

                                 

Contract          Settlement         Price         Change      Volume

Soy                 Jan 2010           3,377         Up   70      174,392

Corn               Sep 2009           1,668         Up    1       111,618

Soy Meal         Sep 2009           2,716         Up   69    1,205,546

Palm Oil          Sep 2009           6,270         Up  232      371,466

Soy Oil            Sep 2009           6,984         Up  248      786,236