August 9, 2011


China's grain commodity prices up on dip buying



Dip buying dominated China's commodity markets Monday (Aug 8), pushing agricultural futures into positive territory.


Commodities had been widely expected to open lower in reaction to Standard & Poor's weekend downgrade of US debt. A broad global asset sell-off followed late last week, though few supported the notion that the market would collapse in a repeat of the 2008 global financial crisis.


The benchmark May soy contract on the Dalian Commodity Exchange rose 0.1% to RMB4,559 (US$708)/tonne, while corn was 0.5% higher.


"Strong demand-and-supply fundamentals will provide agricultural futures prices with some support today," analysts said.


"We believe that a repeat of the [2008 liquidity crunch] scenario is unlikely," experts said. "The rise in the real cost of borrowing in the US is unlikely to affect commodity demand immediately - if at all...[as] the US Treasury market is the most liquid international debt market."

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