July 4, 2011


Friday: US corn acreage expansion weighs on China soy futures


Soy futures on the Dalian Commodity Exchange (DCE) snapped a three-day rally to close lower Friday (Jul 1), tracking sharp declines overnight in Chicago Board of Trade corn and soy futures on a surprising rise in US corn acreage.


The benchmark January soy contract settled 0.6% lower at RMB4,402 (US$681)/tonne. July CBOT soy closed down 2.1% at US$13.0625/bushel Thursday, led by a limit-down drop in corn and in several wheat contracts and bearish data in reports from the USDA.

The local January corn contract slipped 1.7%, the biggest decline among commodities on the DCE. Benchmark cotton on the Zhengzhou Commodity Exchange settled 2% lower at RMB22,355 (US$3,457)/tonne, an eight-month low.


In the report published Thursday, the USDA said US farmers planted 92.282 million acres of corn, surpassing market expectations, the department's previous forecast of 90.7 million and 2010 acreage of 88.192 million.


The increase sent July corn futures down 9.9% to close at US$6.29/bushel, which put pressure on soy prices despite a bullish estimate of US soy acreage for 2011 at 75.208 million acres, below both market expectations and 2010 acreage of 77.404 million.


"Soy prices are expected to be stabilised soon," analysts said. "There is no doubt the bullish acreage data will underpin soy in the next few sessions."

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