July 8, 2011

Soy futures on the Dalian Commodity Exchange extended losses slightly on Thursday (Jul 7) as sentiment remained under pressure from ample supply, while other commodities rose marginally, shrugging off the central bank's decision to raise interest rates.

The benchmark January soy contract settled 0.1% lower at RMB4,427 (US$685)/tonne.

In the last two months, domestic crushers and traders have slowed soy imports, but arrivals of cargoes ordered earlier are sending port inventories higher, the state-controlled China National Grain and Oils Information Centre (CNGOIC) said Thursday.

Soy inventories at Chinese ports have exceeded seven million tonnes, jumping from four million tonnes at the same time last year, the CNGOIC said.

"The market is focusing on the soy inventory destocking," it said.

Analysts said the latest 25-basis-point interest-rate hike has had a very limited impact on the commodities market, as the move was expected.

"We believe the hike is the government's attempt to anchor inflationary expectations amid the widely expected rise in June consumer price index inflation and hence should not be a surprise," Goldman Sachs said in a research note.