August 21, 2008

 

Thursday: China soybean futures settle up; rebound may not sustain

 

 

China's soybean futures traded on the Dalian Commodity Exchange settled up Thursday on continued rebound as soyoil prices in the spot market rose. However, analysts said the rebound may not last long as cash demand hasn't effectively picked up, indicated by thin trade in the cash market.

 

The benchmark January 2009 soybean contract settled RMB29 higher at RMB4,290/tonne, or 0.7%, after trading in a wide range of RMB4,251-RMB4,333/tonne.

 

Cash soyoil prices have been rising this week, helping support the rebound in soybean prices, which recently fell to a four-month low.

 

The processing plants increased their offer prices due to high costs, but the rebound can't last long if the weak demand sustains, said Chen Chao, an analyst at Changjiang Futures Brokerage Co.

 

Meanwhile, a pest outbreak in north China, where most of the country's soybean is produced, also helped push futures prices higher.

 

Sun Zhengcai, China's Agricultural Minister, said the autumn grain faces threat from pest, early frost and even floods, before they are ready for harvest. The threat comes even as the crop growth has been better this year.

 

Yu Haifeng, an analyst in Tianqi Futures, which is based in Heilongjiang province, China's biggest soybean producing area, said the pest impact is only regional and can be prevented before it expands further.

 

Open interest of all soybean contracts was at 402,888 lots at the end of the day, down 10,542 lots from Wednesday.

 

The Ministry of Commerce expects imported soybean arrivals in August to be higher-than-average at 3.37 million tonnes, based on actual arrivals of 1.27 million tonnes during the Aug. 1-15 period, which means supply pressure remains.

 

It expects imported soybean arrivals to be 2.48 million tonnes and 785,600 tonnes in September and October, respectively.

 

Futures contracts of soyoil, palm oil, soymeal and corn, all settled higher.

 

The commerce ministry expects imported soyoil arrivals to be 171,670 tonnes in this month and palm oil arrivals to be 319,321 tonnes.

 

Thursday'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           4,290          Up  29          1,104,520

Corn                 Jan 2009          1,736           Up   9            248,744

Soymeal           Jan 2009          3,563            Up   1         1,009,110

Palm Oil            Jan 2009          7,938          Up 148              33,802

Soyoil               Jan 2009          9,352          Up 244            658,460