August 5, 2008
Tuesday: China soybean futures settle sharply lower; may fall further
China's soybean futures traded on the Dalian Commodity Exchange tumbled Tuesday on supply pressure, and analysts said the fall may continue for a while before hitting bottom.
The benchmark soybean, soybean oil and palm oil futures hit limit-down for the second straight session.
The benchmark January 2009 soybean contract settled RMB198 lower at RMB4,044 a metric tonne, or down 4.7%, after trading in a tight range of RMB4,030-RMB4,079/tonne.
A rise in the supply of soy oil from Argentina following the conclusion of a strike by farmers and a rise in palm oil output in Malaysia and Indonesia have led to a market glut.
The recent tumble has dragged down edible oil prices considerably, but prices could fall even further, said Duan Yujie at Changjiang Futures.
Despite ample domestic supply, analysts said, soybean arrivals are likely to cross 4 million tonnes in August and 3.5 million tonnes in September on earlier purchase contracts.
The recent tumble in soybean and soy oil on the Chicago Board of Trade, which may continue, the fall in crude oil prices and a stronger dollar are all pressuring the domestic market, they said.
The open interest in the total soybean contracts fell 87,624 lots Tuesday to 623,296 lots.
However, Pei Yong, a research manager at Chinatex Grains & Oils Import & Export Corp., said although declining open interest in the benchmark soybean contract indicated possible subdued selling momentum, it's not easy to forecast the support level, given the market's overreaction.
Soybean meal and corn futures also settled lower.
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 4,044 Dn 198 608,514
Corn Jan 2009 1,770 Dn 17 953,456
Soy Meal Jan 2009 3,372 Dn 160 622,090
Palm Oil Jan 2009 7,798 Dn 408 1,014
Soy Oil Jan 2009 8,936 Dn 448 12,100
