August 8, 2008

Friday: China soybean futures settle higher, but fundamentals bearish


Soybean futures traded on the Dalian Commodity Exchange settled mostly slightly higher Friday, but analysts said fundamentals remain bearish.


The benchmark January 2009 soybean contract settled RMB18 higher at RMB4,099 a metric tonne after trading between RMB4,075-RMB4,136/tonne.


Open interest in soybean contracts fell 25,994 lots to 443,842 lots.


Long position holders were liquidating positions amid weak sentiment, as the market has gone from bullish earlier this year to bearish, said Liu Xinghua, an analyst at Great Wall Futures Co.


A technical rebound Thursday on the Chicago Board of Trade in reaction to an oversold market is unlikely to last long, as fundamentals all indicate further falls, said analysts.


Strong gains in the dollar, declines in crude oil prices, an on-track increase in global soybean output and better soybean quality for the new crop year from September plagued the market.


Liu expects the benchmark soybean contract to decline toward RMB3,500/tonne in the next two months, pushing down prices of soy products as well.


Processing plants are suffering losses from importing soybeans at higher contract prices, which may force more plants to suspend production, Heilongjiang Jiusan Oil and Fat Co. said in a note.


But dwindling supply will help lend support to edible oil prices when demand picks up in autumn during holidays such as the National Day holiday.


Soyoil futures and soymeal futures settled mixed.


Palm oil futures settled lower, but corn futures settled mostly higher.


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


Contract        Settlement      Price              Change            Volume

Soybean        Jan 2009        4,099              Up  18              1,106,932

Corn             Jan 2009         1,784              Up   5              163,692

Soymeal       Jan 2009         3,343               Up   7              818,204

Palm Oil        Jan 2009        7,800                Dn  18             22,590

Soyoil           Jan 2009        9,028                Up  14             440,026

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