October 16, 2008
Thursday: China soybean futures settle sharply down; technical rebound due
China's soybean futures traded on the Dalian Commodity Exchange settled sharply lower Thursday, but analysts said a technical rebound is due.
The new benchmark May 2009 soybean contract settled RMB108, or 3.4%, lower at RMB3,059/tonne. It touched the 5% lower limit towards the closing bell.
Mixed with panic were expectations that prices were nearing the bottom, said an analyst with Green Futures, who declined to be named.
The market is oversold following a sustained tumble, and there is a need for a technical rebound, analysts said.
Today's trading showed signs of bargain hunting by funds.
Open interest in all soybean contracts rose by 100,784 lots, to 559,388 lots Thursday.
Trading volume rose to 1,694,534 lots from 1,385,690 lots Wednesday.
RMB3,000/tonne could be a bottom, and there isn't much room for further big declines once prices fall below that level, said Gao Yunyue, an analyst at Dadi Futures Brokerage, adding that a large rebound is unlikely, and that the market could consolidate in the near term.
Corn futures settled slightly lower, and soymeal, soyoil and palm oil futures all settled sharply lower, with benchmark contracts touching the 5% lower limit.
Bearish domestic demand amid ample stocks hit prices heavily. Imported soybean stocks at Chinese ports are at around 3.6 million tonnes, which can meet demand for one and half a months, said Tianqi Futures analyst Lv Qinghai, who pegged soyoil prices to roll back to RMB5,000/tonne seen in 2006.
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 May 2009 3,059 Dn 108 1,694,534
Corn May 2009 1,633 Dn 2 794,794
Soymeal Jan 2009 2,569 Dn 99 518,724
Palm Oil Jan 2009 4,784 Dn 250 4,316
Soyoil Jan 2009 6,240 Dn 320 104,078
