September 11, 2008


Thursday: China soybean futures settle down on coming new supply, CBOT


China's soybean futures traded on the Dalian Commodity Exchange settled lower Thursday on coming new supplies and overnight losses at the Chicago Board of Trade.


The benchmark January 2009 soybean contract settled RMB29 lower, or 0.7%, at RMB4,004/tonne after trading in a range of RMB3,976-RMB4,028/tonne.


In the cash market, although the scattered supply of newly harvested soybeans hasn't affected overall prices due to the very light volume, traders stayed on sidelines on cautiousness ahead of bigger injections of new supply.


Cash soymeal prices were lower on sluggish demand and coming supply pressure from corn, while soyoil processing plants increased sales efforts to clear inventories ahead of new soybean purchases, Tianqi Futures said in a note.


The fall on CBOT also affected the DCE, which didn't follow through on Wednesday's weak rebound.


Soyoil futures settled slightly higher, but palm oil, soymeal and corn futures all settled lower.


Although the government has recently expressed concern over declining farmer incomes this year, which may damp interest in growing grain crops in the coming year, analysts don't expect it to hike grain prices during harvest season.


"Increasing government subsidies is more practical (than hiking grain prices)," said Yu Baoping, a researcher at the rural economy research center under the Development Research Center of the State Council, noting that raising grain prices would accelerate inflation.


China's consumer price index rose 4.9% on year in August. This was the first time it was below 6% this year, thanks to slowing food price growth.


But the producer price index rose 10.1% in August, up from 10.0% in July, suggesting the government should still be cautious in shifting its policy focus from inflation to growth.


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            4,004         Dn  29            963,952

Corn               May 2009           1,772          Dn   4            180,364

Soymeal          Jan 2009            3,363         Dn  25            822,426

Palm Oil           Jan 2009            6,812         Dn  20              75,800

Soyoil              Jan 2009            8,444         Up  38             572,992


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