June 9, 2011
Soy futures on the Dalian Commodity Exchange (DCE) ended marginally lower Wednesday (Jun 8) after directionless and thin trading, as concerns over further credit tightening measures kept cautious investors on the sidelines.
The benchmark January contract settled RMB1 (US$0.15) lower at RMB4,476 (US$691)/tonne, trading in a narrow range of RMB4,460-4,490 (US$688-693)/tonne.
July CBOT soy had risen 0.8% overnight to close at US$13.94 a bushel as US plantings continued to lag in the wet fields of the eastern Midwest, but prices edged lower in electronic trading during the Asian session Wednesday.
On the DCE, investors have already factored in the good news that Beijing would lift six-month price caps on edible oils in June, and prices came under pressure again from the government's sales from state reserves to big crushers at below-market prices to increase market supply and keep retail prices stable, analysts said.
Overall monetary and credit conditions are expected to remain tight or tighten further, and some traders believe that the government is also likely to extend the price caps on vegetable oils, as inflation pressures due to high pork and vegetable prices persist.
Generally, edible oil markets are gaining momentum because of support from supply-demand fundamentals and production costs, analysts said.
The government's sale of more than two million tonnes of soy at a very low price to the big crushers and some state crushers was widely criticised for the damage it did to small crushers, which are not qualified to participate in the programme.
Liu Denggao, deputy president of the China Soybean Industry Association, said that the sales, without considering the interests of small crushers, were a breach of the principles of a market economy.