August 21, 2003

China Soybean Futures Settle Sharply Lower

China's Dalian Commodity Exchange soybean futures settled sharply lower Wednesday, weighed down by bouts of long liquidation, after almost non-stop gains by most contracts over the past three weeks.

The nearby September 2003 contract, which was widely speculated to have received special interest from institutional long position holders, suffered the heaviest selling.

The September contract hit 3% limit down at 2,700 yuan ($1=CNY8.28) a metric ton at the opening bell and was firmly held at that level for most of the day, despite light bargain hunting which helped the contract struggle toward an intraday high of CNY2,714/ton. The contract settled at CNY2,700/ton.

As the impressive selling by long position holders damped the mood of investors, short position holders chose to follow suit by selling the benchmark January 2004 contract, which slid CNY32/ton to CNY2,493/ton.

The other seven soybean contracts lost CNY21-CNY44/ton. Traders said Wednesday's quick retracement was a natural aftermath of the persistent gains.

However, the sudden slump was unlikely to hurt the overall bullish trend for China's soybean futures, given that the Chinese government has shown its intention to reduce the country's huge soybean imports, a Shanghai-based trader said.

Dalian's soymeal futures settled sharply lower on profit taking. The benchmark November 2003 contract fell CNY39/ton to CNY2,192/ton, after trading between CNY2,179-CNY2,206/ton.

Total trading volume in the Dalian soybean futures market shrank to 690,676 lots from Tuesday's 931,128 lots.