July 27, 2009

Soy futures traded on the Dalian Commodity Exchange settled lower Monday, tracking Friday's fall on the Chicago Board of Trade.

 

The benchmark May 2010 soy contract settled RMB28 a metric tonne lower at RMB3,502/tonne.

 

An unfavorable price outlook for U.S. soy due to good weather and pressure from the Chinese government's soy sales painted a gloomy picture for domestic prices.

 

U.S. weather in soy areas has been favorable, while soy areas in Argentina in the 2009-10 crop year are expected to set a record high.

 

The Chinese government failed to sell 500,000 tonnes of soy from its several million tonnes of reserves last week due to higher-than-market prices and offered to sell the same amount again this week.

 

The failure to sell the soy will only delay the supply pressure temporarily and the soy will enter the market sooner or later, so the pressure can't be ignored, said local processor Jiusan Oil and Fat Co. in a note.

 

The market has been expecting the government to launch favorable policies such as providing subsidies to processors to help the release of government soy by the September harvest.

 

Trading volume for all soy contracts declined to 154,786 lots from 221,738 lots Friday.

 

Open interest fell 652 lots to 389,934 lots.

 

Corn futures settled unchanged, while soymeal futures, palm oil futures and soyoil futures settled lower.

 

Monday's settlement prices in yuan a metric tonne for benchmark contracts and the volume for all contracts in lots (One lot is equivalent to 10 tonnes):

                 

Contract        Settlement      Price        Change       Volume

Soy               May 2010       3,502        Dn   28      154,786

Corn              Jan 2010       1,620         Unch           96,978

Soymeal        Jan 2010       2,816         Dn   27      895,060

Palm Oil         Jan 2010       5,638         Dn   66      489,370

Soyoil            Jan 2010       7,010         Dn   88      576,466