July 3, 2007

 

Tuesday: China soybean futures settle lower on supply glut; corn up tad

 

 

Soybean futures traded on the Dalian Commodity Exchange settled slightly lower Tuesday, weighed by a domestic supply glut despite overnight gains in Chicago Board of Trade soybean futures.

 

The benchmark January 2008 soybean contract fell RMB12 to settle at RMB3,311 a metric tonne, after trading between RMB3,294/tonne and RMB3,325/tonne.

 

Total trading volume fell to 184,942 lots from 354,652 lots Monday.

 

One lot is equivalent to 10 tonnes.

 

"(Domestic) soybean futures are likely to test lower, or at least lag the CBOT gains, on weak fundamentals - the high stocks level at ports and crushers," said Gao Yanrong, an analyst with Dalu Futures Co.

 

However, short-covering may prevent prices falling too sharply.

 

Soymeal futures and soyoil futures settled mostly lower on weakness in soybeans.

 

The most heavily traded January 2008 soymeal contract settled RMB6 lower at RMB2,644/tonne, while the benchmark September 2007 soyoil contract settled RMB14 lower at RMB7,868/tonne.

 

Meanwhile, traders said the high inventory of soymeal at crushers has forced some plants to cut output in Jiangsu province.

 

Corn futures settled up slightly, with the benchmark January 2008 contract rising RMB5 to settle at RMB1,569/tonne.

 

Trading volume for all corn contracts fell to 312,328 lots from 383,834 lots Monday.

 

Analysts' opinions now on the outlook of domestic corn prices amid a mixture of supportive global prices and the current weakness in domestic demand.

 

"If international prices continue to rise, it'll prompt more exports, hence alleviating the domestic supply glut," said Gao.

 

However, said Zheng Yifan, a trader with China Grains & Oils Group Feed Corp, "High stockpiles and weak ethanol fuel demand means the earlier gains are overdone, and traders will have to sell at a cheaper price sooner or later."