July 29, 2009
Wednesday: China soy futures up on tight supply; government sales may fail
Soy futures traded on the Dalian Commodity Exchange settled higher Wednesday on tight supply, as the market expected government sales to fail again.
The benchmark May 2010 soy contract settled RMB14 a metric tonne higher at RMB3,528/tonne.
The government planned to sell 500,000 tonnes of soy from its reserves Wednesday but hasn't been successful so far, as the base auction price is much higher than cash prices.
Last week, the government failed to sell any soy in another auction.
"Traders dare to set up long positions today, as they expect government sales will fail again," said Gao Yunyue, an analyst with Dadi Futures Brokerage, adding it's hard for domestic soy prices to fall even if Chicago Board of Trade prices do.
Local soy supply will remain tight if the government is unable to release its soy.
Tightening local supply will also help increase imported soy volume.
The Ministry of Commerce said Wednesday that China's soy imports in July will likely set a fresh record high of 4.82 million tonnes after the country imported 4.71 million tonnes in June, up 31% compared with last June and the highest recorded volume for a single month.
Trading volume for all soy contracts rose to 168,676 lots from 157,146 lots Tuesday.
Open interest fell 12,242 lots to 366,792 lots.
Corn futures settled lower, while soymeal futures, palm oil futures and soyoil futures all settled higher.
Wednesday's settlement prices in yuan a metric tonne for benchmark contracts and volume for all contracts in lots (One lot is equivalent to 10 tonnes):
Contract Settlement Price Change Volume
Soy May 2010 3,528 Up 14 168,676
Corn Jan 2010 1,620 Dn 4 80,550
Soymeal Jan 2010 2,848 Up 21 2,066,302
Palm Oil Jan 2010 5,782 Up 18 764,902
Soyoil Jan 2010 7,134 Up 24 936,128
