June 26, 2008


Thursday: China soybean futures settle sharply up, tracking CBOT rally



Soybean futures traded on the Dalian Commodity Exchange settled sharply up Thursday, tracking overnight gains in Chicago Board of Trade soybean futures.


The benchmark January 2009 soybean contract rose 2.4% to settle at RMB5,043 a metric tonne, after trading between RMB5,021/tonne and RMB5,075/tonne.


"The U.S. weather conditions have become a major bullish factor, and we expect prices to remain at high levels, given the worries on weather conditions at one of the major production regions," said Liu Xinghua, an analyst at Great Wall Futures.


The adverse weather may already have affected output, and how far prices can go depends on how long the weather conditions persist, Liu said.


DTN Meteorlogix, a business weather information provider, has forecast rainfall up to 2.5 inches in the next three days, which may result in some renewed flooding and hold back field work and replanting efforts.


Meanwhile, "a relatively tight spot market indicates that soybean meal prices will probably have more upside on the back of higher cash prices due to a strong seasonal demand," said Tianqi Futures.


Soybean is crushed to make soy meal and soybean oil, from which feedmeal and edible oil are produced.


Soy meal and soy oil futures also settled higher, with profit-taking trimming earlier gains of soy meal.


Corn futures settled little changed. "The strong demand for feedmeal is more likely to send corn prices higher than lower at the moment," said Liu.


Corn is still mostly used to make feedmeal in China.


Thursday's settlement prices in yuan a metric tonne and volume for all contracts in lots:


Contract          Settlement          Price          Change          Volume

Soybeans          Jan 2009           5,043          Up 116          510,258

Corn                 Jan 2009           1,921          Up   5           319,616

Soymeal            Jan 2009          4,014          Up  91           840,804

Palm Oil            Sep 2008         10,586         Up 188            22,358

Soyoil               Sep 2008         11,658         Up 204          163,554

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