June 16, 2011


Wednesday: China soy futures tad down on CBOT decline, China's credit tightening


Soy futures on the Dalian Commodity Exchange (DCE) settled marginally lower Wednesday (Jun 15), tracking a sharp decline in overnight CBOT soy futures pressured by better crop weather in the US and after China's central bank Tuesday raised banks' requirement reserve ratio for the sixth time this year.


The benchmark January soy contract settled 0.1% lower at RMB4,458 (US$687)/tonne. July CBOT soy closed down 1.1% at US$13.68 a bushel.


The fresh monetary tightening was largely shrugged off by agricultural commodities traded on the DCE and the Zhengzhou Commodity Exchange, with the sugar futures contract on the Zhengzhou bourse closing up nearly 2% and cotton up about 1%, as investors had already factored in the much-anticipated measure.


Soyoil and palm oil on the DCE and rapeseed oil on the Zhengzhou bourse all closed marginally higher, ignoring local media reports that China will extend price caps on cooking oil sales to August 15 to keep the market stable ahead of heavy consumption during the Mid-Autumn Festival.


"Soy is mainly influenced by supply-demand fundamentals, not monetary tightening," an analyst said.


But continued monetary policy tightening will curb China's overall demand, so soy futures will likely stay rangebound in the near future, he added.

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