June 30, 2011

Soy futures on the Dalian Commodity Exchange (DCE) extended gains Wednesday (Jun 29) in a broad-based technical rally, led by crude oil in Asian trading, as optimism that a Greek vote on an austerity package will pass in the country's parliament.

The benchmark January soy contract settled 0.2% higher at RMB4,424 (US$684)/tonne, with trade volume falling to one-week low at 54,054 lots compared with 107,512 lots Wednesday. One lot of soy on the DCE is equivalent to 10 tonnes.

Traders stayed on the sidelines, waiting for clearer fundamental cues from an important USDA acreage report, which is due Thursday. Meanwhile, commodities markets are awaiting the Greek vote later Wednesday.

"DCE soy futures have stabilised" after falling along with other commodities, but haven't "shown signs of a long-term bull-market run," analysts said.

Soy futures prices are not gaining favour with either buyers or sellers, he said, describing the market situation as a stalemate.

The market expects the USDA's acreage reports to be bullish. In its March report, the USDA said this year's soy area was expected to fall 1% to 76.609 million acres. Analysts said the actual acreage may be lower than the March estimate.

But some fundamental problems remain, as soy is oversupplied in China, the world's largest importer and consumer. Edible oil consumption is in its off-season due to hot summer weather.