July 8, 2008

China's soymeal futures plunge after CBOT fall  

China's soymeal futures traded on the Dalian Commodity Exchange settled sharply lower Tuesday, tracking a fall on the CBOT overnight.

The benchmark January 2009 soy meal contract settled RMB 172 lower at RMB 3,931 a tonne, or down 4.2 percent.

The benchmark futures were limit-down briefly in the morning session on weakening cash prices, before recovering a bit. They were limit-down again just before the exchange closed for the day.

"The cash prices are too high, and a correction is now expected," as soy meal has been overbought due to high demand, said Xiao Jun, an analyst at Shanghai JCI.

The high soymeal prices also curbed demand from the feedmeal sector, which is at comparatively low levels.

The benchmark January 2009 soy contract settled RMB162 lower at RMB4,920/tonne, or down 3.2 percent.

The good weather forecast in US major soy producing areas and an accumulated big jump on the CBOT are likely to trigger a further downward correction in the US market, said a senior industry participant with a state reserve house. However, the fall could be limited as local soy futures prices have fallen a lot recently.

Meanwhile, the recent rise in the dollar and the drop in crude oil prices on the New York Mercantile Exchange overnight added to the pressure, curbing the inflow of speculative funds, said analysts.

Soyoil, palm oil and corn futures all settled lower.

(US$1 = RMB 6.86)