October 7, 2008


Tuesday: China soybean futures settle limit-down for second session in row


China's soybean futures traded on the Dalian Commodity Exchange settled limit-down for the second session in a row Tuesday, tracking the counterparts' huge losses on the Chicago Board of Trade overnight.


The benchmark January 2009 soybean contract settled RMB191 lower at RMB3,643 a metric tonne, or down 5.0%.


The contract, which closed at a 13-month low, opened limit-down and didn't move for the whole session, the same as yesterday.


The tumble in crude oil prices overnight and a stronger dollar also plagued the commodities market.


Analysts said there was more room for soybeans to fall amid the global financial crisis; some were even expecting another limit-down during the Wednesday session.


"It is entering a bear market, and you should always think of short-selling even if there is a rebound," said Dong Shuangwei, an analyst at Capital Futures.


Analysts said the bear market, which concluded the bull market that began in late 2006 triggered by surging crude oil prices, is likely to last for 2-3 years.


The import cost for U.S. soybeans for November delivery now stands at around RMB3,800/tonne, according to a note from the China National Grain and Oils Information Center.


China has harvested 70% of its soybean crop as of Oct. 3, according to data released by the Ministry of Agriculture.


The open interest in all soybean contracts fell 20,122 lots to 336,024 lots Tuesday.


The trading volume rose to 24,254 lots from 5,340 lots Monday.


Corn futures settled lower, but the extent of the fall was reduced. They didn't track the global counterparts closely as China is self-reliant in corn and as the government maintains a strict control over corn trade.


The benchmark soybean meal, soybean oil and palm oil futures all settled limit-down for the second session in a row.


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           3,643         Dn  191          24,254

Corn                May 2009           1,651         Dn   24      1,176,234

Soymeal           Jan 2009           3,097         Dn  162            8,146

Palm Oil            Jan 2009           5,868         Dn  308            1,132

Soyoil               Jan 2009           7,442         Dn  390           16,164


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