October 15, 2008


Wednesday: China soybean futures settle down sharply; with commodity trend



Soybean futures traded on China's Dalian Commodity Exchange settled sharply lower Wednesday, tracking weaker crude oil prices and falls in other commodities markets.


The new benchmark May 2009 soybean contract settled RMB138 lower at RMB3,167/tonne, or down 4.2%, after touching the 5% lower limit briefly during the session.


It is a volatile market and it's very difficult to predict daily movements, said Huang Xiao, an analyst at Capital Futures.


Meanwhile, the possibility of a stronger dollar may also add downward pressure on the commodities market.


The 81.50 level is a very strong support for the ICE Futures U.S. Dollar Index, which has completed its bottom building, said a local feedmeal trader.


There is a rumor that China is seeking to buy 2 million tonnes of soybean on the international market, but it isn't having any impact as the country's ample domestic supplies are already weighing on prices.


China's soybean output is expected to grow 37.5% on year to 17.5 million tonnes in 2008, according to the China National Grain and Oils Information Center.


More than 3.5 million tonnes of imported soybeans have also been held at Chinese port warehouses since February, traders said.


Open interest in all soybean contracts rose 51,738 lots to 458,604 lots Wednesday.


Trading volume declined to 1,385,690 lots from 1,531,238 lots Tuesday.


Corn futures, soymeal futures, soyoil futures and palm oil futures all settled sharply lower.


Benchmark palm oil futures settled limit down, while benchmark soyoil futures stayed at limit down for most of the session.


Ample domestic supply and sluggish demand puts many traders and oil processors in a difficult situation, with some even facing bankruptcy, said Huang.


Following are Wednesday'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         May 2009        3,167       Dn  138     1,385,690

Corn              May 2009         1,635       Dn   32        727,898

Soymeal         Jan 2009         2,668       Dn  108        839,476

Palm Oil          Jan 2009         5,034       Dn  264           6,672

Soyoil             Jan 2009         6,560       Dn  334        170,012

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