September 18, 2008
Thursday: China soybean futures settle down; palm oil continues tumble
China's soybean futures traded on the Dalian Commodity Exchange settled lower Thursday as funds retreat from the market.
The benchmark January 2009 soybean contract settled RMB12 lower at RMB3,867/tonne, or down 0.3%, after trading in a range of RMB3,805-RMB3,952/tonne.
"The tumble (along with the global financial woes) showed that (the surge since last year) in commodities prices was largely boosted by funds, and now it's time the prices (reflect) actual supply and demand," said Li Dongji, an analyst at Guotai Junan Futures Ltd.
The benchmark contract opened slightly higher, tracking the overnight mild gains at the Chicago Board of Trade.
But the market lacked confidence and edged lower into negative territory with vegetable oil futures and crude oil prices declining.
As funds continue to flow out of the commodities market, the rebound in CBOT could be short-lived, with November soybeans, which ended 15 cents higher at US$11.39 a bushel Wednesday, likely seeing resistance at US$11.55-US$11.80/bushel, said Li.
Open interest in all soybean contracts fell 2,960 lots to 454,996 lots Thursday.
Corn futures and soymeal futures settled higher, while palm oil futures and soyoil futures settled lower.
Benchmark palm oil futures continued to tumble after hitting 5% limit-down for two straight days.
Ample stocks at Chinese ports and expected weak consumption in the coming season have sent palm oil futures prices sharply down to their lowest levels this year, falling from above RMB11,000 a metric tonne in mid-June.
The production cost of palm oil is only around RMB3,000/tonne, meaning there is further room for decline, said Duan Yujie, a manager at Changjiang Futures.
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 3,867 Dn 12 1,806,642
Corn May 2009 1,763 Up 9 369,404
Soymeal Jan 2009 3,330 Up 7 1,343,980
Palm Oil Jan 2009 5,972 Dn 150 177,520
Soyoil Jan 2009 7,836 Dn 86 666,116