July 23, 2008


Wednesday: China soybean futures settle sharply down amid agricultural bearishness



China's soybean futures traded on the Dalian Commodity Exchange settled sharply lower Wednesday as their counterparts at Chicago Board Of Trade failed to post significant gains overnight after a recent tumble.


The benchmark January 2009 soybean contract settled RMB94, or 2.0%, lower at RMB4,558 a metric tonne, after trading in a broad range between RMB4,478 and RMB4,668/tonne.


"The risk of global agricultural product futures turning bearish has led to greater panic selling and profit-taking," said Xiao Jun at commodity consultancy firm Shanghai JCI.


November soybean contracts traded at CBOT ended 6 cents higher at US$14.09 Tuesday, failing to show the strong upward momentum expected by some market participants after big losses that began to accrue Thursday.


The fall in crude oil prices at the New York Mercantile Exchange overnight added to pressure on soybeans and other oilseeds.


Soybean's earlier consolidation is likely to end, and there is no evidence that it will go higher in the near term, said another analyst.


A rumor spread in the market that the government may sell 200,000 tonnes of soyoil from its state reserves that were bolstered by imports over the last few months. Some market participants said the rumor may have been started by short position holders to further depress prices, noting that the government wouldn't be likely to release reserves when prices are already at low levels.


Others said although there is no urgent need to sell government reserves, it may be a good time to do so to push prices lower to curb inflation.


The benchmark January 2009 soyoil contract traded on the DCE settled at RMB10,404/tonne Wednesday, compared with RMB13,828/tonne March 3.


Soyoil, palm oil and soymeal futures all settled sharply lower, but corn futures settled slightly higher.


Wednesday'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           4,558          Dn  94         1,205,744

Corn                 Jan 2009          1,882           Up   2            293,762

Soymeal           Jan 2009           3,742          Dn  50         1,108,334

Palm Oil           Sep 2008           9,096         Dn 334             19,022

Soyoil               Jan 2009         10,404         Dn 270            328,666

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