September 9, 2008

 

Tuesday: China soybean futures settle sharply down on stronger dollar
  

 

China's soybean futures traded on the Dalian Commodity Exchange settled sharply lower Tuesday on a strengthening dollar.

 

The benchmark January 2009 soybean contract settled RMB100 lower at RMB4,026 a metric tonne, or down 2.4%, after trading in a RMB3,984/tonne-RMB4,096/tonne range.

 

The benchmark contract was struggling around the crucial level of RMB4,000/tonne in the afternoon session, after it opened lower and edged steadily lower.

 

The market participants know the risk of a stronger dollar and no one is willing to endanger his money any more, said Xiao Jun, an analyst at commodities consultancy firm Shanghai JCI.

 

A stronger dollar is bearish for commodities as most raw materials are dollar-denominated, making it more expensive for foreign buyers to import.

 

Although many analysts expect the dollar index to break through 80 as early as tonight, some don't think the dollar can sustain above the level for long.

 

"Anyway the U.S. economy is not very good, and when the dollar stabilizes and corrects, it's time for soybean to rise," said a grain official.

 

Soybean oil, palm oil futures, soybean meal and corn futures all settled sharply lower.

 

The benchmark palm oil January contract hit 5% limit down during the session, putting pressure on all vegetable oil futures.

 

Some analysts expect palm oil futures to fall to at least RMB6,500/tonne, before touching the short-term bottom, as the weak consumption season is approaching, along with cooler weather.

 

Palm oil has a high melting point, which makes it unsuitable for winter.

 

Soy oil futures have tumbled to near one-year lows, while palm oil futures fell to their lowest level since their Oct. 29, 2007 debut.

 

Tuesday'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               4,026           Dn 100       1,335,032

Corn               May 2009               1,769           Dn  21          376,132

Soy Meal          Jan 2009               3,361           Dn  81       1,119,670

Palm Oil           Jan 2009               6,978           Dn 252           45,874

Soy Oil             Jan 2009               8,442           Dn 316         526,630