July 7, 2011

 

Wednesday: China soy futures slide after China pledges more tightening efforts
 

 

Soy futures on the Dalian Commodity Exchange declined Wednesday (Jul 6) in thin trade, ending a two-day rally, as investors turned cautious after Chinese Premier Wen Jiabao Tuesday repeated government statements that maintaining price stability is a priority.

 

The benchmark January soy contract settled 0.2% lower at RMB4,430 (US$685)/tonne.

 

"Without fresh bullish news, the market is unable to sustain the rally," analysts said.

 

Soy staged a short-term rebound in the last two sessions on bargain buying and the absence of bearish news, she said.

 

During a trip to the northeastern province of Liaoning, Wen said China's inflation will be effectively suppressed when government policies take effect, without specifying which policies he was referring to. He added that pork prices will peak within a few months.

 

High pork prices and sharply reduced domestic soy acreage have been regarded as bullish recently, but they are still unable to underpin soy and soyoil prices in the long run, experts said.

 

The market expects China's consumer inflation to peak for this year at more than 6% in June, sparking speculation of higher interest rates.

 

Pork prices contributed 1.2 percentage points to the 5.5% CPI inflation in May, analysts said, adding that CPI inflation is expected to reach 6.3% in June, with 1.6 percentage points attributed to pork prices.

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