July 5, 2011

Soy futures on the Dalian Commodity Exchange (DCE) rose Monday (Jul 4), buoyed by gains in Chicago soy prices Friday and a broad technical rally on Chinese commodity bourses.

The benchmark January soy contract settled 0.6% higher at RMB4,427 (US$685)/tonne, while traded volume increased sharply after a tepid session Friday.

Chicago Board of Trade July soy closed 1.2% higher at US$13.2225/bushel Friday, as investors covered short positions ahead of the Independence Day long weekend.

Soy futures have shown signs of stabilisation as supply concerns re-emerge in the US, the world's largest soy producer and exporter, after the USDA reported lower-than-expected soy acreage, analysts said.

The USDA last week forecast soy area at 75.2 million acres, compared with a March forecast of 76.6 million acres.

Soy will likely find spillover support from DCE soyoil and palm oil, as well as Zhengzhou Commodity Exchange rapeseed oil, which will likely rebound in the next few sessions after being oversold, analysts said.

Still, imports could pressure prices further as port inventories, which are currently around seven million tonnes, continue to rise, the state-controlled China National Grain & Oils Information Centre said.

Crushers were losing about RMB300 (US$46)/tonne from imported soy last week, making it the 20th consecutive week of negative crushing margin, it said.

Traded volume of soy on the DCE was 89,452 lots, compared with 60,458 lots Friday. One lot is equivalent to 10 tonnes.