Tuesday: China soy futures settle down; corn bucks trend on drought

 

 

China's soy futures traded on the Dalian Commodity Exchange settled lower Tuesday, but the fall was moderate compared with yesterday's panic tumble as some short sellers squared their positions.

 

The benchmark May 2010 soy contract settled RMB27 lower at RMB3,671 a metric tonne, down 0.7%.

 

Some short sellers squared their positions as the panic eased somewhat after Monday's selloff, which tracked the sharp decline in Chinese equity markets.

 

The benchmark Shanghai Composite Index ended up 0.6% at 2,683.72 Tuesday, after ending down 6.7% Monday, the biggest single-day percentage loss since July 10, 2008, when it dropped 7.7%.

 

However, buying in soy and soy products futures wasn't active as traders remained cautious, still digesting yesterday's panic selling in equities.

 

China's manufacturing activity expanded for the sixth consecutive month in August, an official purchasing managers index showed Tuesday, reflecting continued recovery in economic growth.

 

The PMI of China Federation of Logistics & Purchasing rose to a 16-month high of 54.0 in August from 53.3 in July.

 

"Given the jittery onshore A-shares market, this reading may provide some support to asset prices, especially commodity prices," said Bank of America Merrill Lynch in a research note Tuesday.

 

The trading volume of all soy contracts declined to 97,244 lots from 206,850 lots Monday.

 

The open interest fell 2,440 lots to 288,444 lots Tuesday.

 

Soymeal, soyoil and palm oil futures all settled lower, while corn futures bucked the trend, settling slightly higher.

 

Corn futures were supported by a drought in the northeast major producing areas, which gave rise to concerns corn output this year would see a decline from last year.

 

Tuesday's settlement prices in yuan a tonne for benchmark contracts and volume for all contracts in lots (one lot is equivalent to 10 tonnes):

 

Product  Contract      Settlement Price  Change     Volume

 

Soy         May 2010      3,671        Dn    27         97,244

Corn       May 2010      1,756        Up     1         467,776

Soymeal  May 2010      2,881        Dn   25      1,315,128

Palm Oil   May 2010      6,254        Dn   96        424,010

Soyoil      May 2010      7,362        Dn   88        691,996