June 6, 2011

Friday: China's soy futures lift on CBOT; gains capped

Soy futures on the Dalian Commodity Exchange rose Friday (May 3) in a broad commodities rally tracking higher soy on the Chicago Board of Trade due to concerns that US soy planting progress is behind schedule.

The benchmark January contract settled 0.7% higher at RMB4,499 (RMB694)/tonne. July CBOT soy rose 1.5% overnight to close at US$14.07 a bushel.

Oversupply worries capped gains as high port inventories of more than six million tonnes, in addition to sales of more than two million tonnes from state reserves, pressured prices, analysts said.

The government's price caps on edible oils expired end-May and market participants said Beijing may not extend the controls as negative margins have weighed on Chinese soy crushers for a long time, even forcing many of them to suspend operations.

Equities and commodities are ignoring a likely interest rate hike during the three-day Dragon-Boat Festival which starts Saturday, one week ahead of the release of market-moving May data, including inflation numbers.

China's agricultural futures exchange, DCE and Zhengzhou Commodity Exchange will be closed for the festival holiday and reopen Tuesday.