July 22, 2008
Tuesday: China soybean futures decline on supply; buying caps fall
China's soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday on expectations of an increase in supplies, but the declines were capped on bargain hunting purchases.
The benchmark January 2009 soybean contract settled RMB35 lower at RMB4,652 a metric tonne, or down 0.7%, after trading between RMB4,617-RMB4,676/tonne.
Favorable weather outlooks in major soybean growing areas in both the U.S. and China, as well as resumption of exports from Argentina after farmers in the country called off their strike, encouraged traders to sell.
But analysts said the bigger fall on DCE Monday compared with Chicago Board of Trade, high import costs and the support from high crude oil prices have limited the possibility of a further big fall in the near term.
There were bargain-hunters entering the market, and "we suggested buyers to set up long positions at this low level," said Cui Ruijuan, an analyst at Guangfa Futures.
The domestic market is also looking at the CBOT for cues, which was oversold in the past three sessions.
The CBOT November soybean contract is likely to be strongly supported at US$14.00 per bushel in the near term, which helped to limit the fall at DCE Tuesday, said Yu Haifeng, an analyst at Tianqi Futures. He said soybean contracts will edge lower in the longer run.
Soyoil futures, palm oil futures and corn futures all settled lower, but soymeal futures settled mostly higher.
Tuesday's settlement prices in yuan a metric tonne and volume for all contracts in lots (One lot is equivalent to 10 tonnes):
Contract Settlement Price Change Volume
Soybean Jan 2009 4,652 Dn 35 654,778
Corn Jan 2009 1,880 Dn 5 307,922
Soymeal an 2009 3,792 Up 10 812,542
Palm Oil Sep 2008 9,430 Dn 190 17,084
Soyoil Jan 2009 10,674 Dn 94 200,108
