October 20, 2008
Monday: China soybean futures settle sharply up on government buying plan
Soybean futures traded on the Dalian Commodity Exchange settled sharply up Monday on news of the government's purchase plan, but analysts doubt the news can help the product fully decouple from the weak commodities complex after a few weeks.
The National Development and Reform Commission said Monday on its Web site the government has started buying soybeans from a major producing region in the northeast at RMB3,700 a metric tonne for the state reserves.
Analysts expect the news to fuel a rally in the next few sessions, as futures prices are significantly lower, but said, however, soybean is likely to continue to be weighed by the overall weak sentiment in commodities after a short-lived rally.
The benchmark January 2009 soybean contract settled RMB153 higher at RMB3,330/tonne.
"The state reserves' buying news, which has been circulating since Friday, was the major driver of today's strong rally," said a trader at an international trade house based in Beijing.
Short covering in other commodity markets also boosted sentiment during the session, he added.
Soybean meal and soybean oil futures traded on the exchange also settled sharply higher on soybean's spillover strength.
Corn futures settled up, with the benchmark contract rising 1.8% to settle at RMB1,698/tonne.
The NDRC, China's top economic planning agency, said the government has temporarily been buying corn in the northeast region at RMB1,500/tonne for state reserves.
The announcement by the NDRC followed a communiquÃ© by China's Communist Party on rural reform and development.
The document, which was published by the Xinhua News Agency Sunday, said Beijing will continue to work towards ensuring the supply and output of major agricultural products, while simultaneously raising farmers' income.
Monday's settlement prices in yuan a metric tonne and volume for all contracts in lots:
Contract settlement Price Change Volume
Soybeans May 2009 3,330 Up 153 241,880
Corn May 2009 1,698 Up 31 936,832
Soymeal Jan 2009 2,766 Up 113 249,056
Palm Oil Jan 2009 5,024 Up 176 92,252
Soyoil Jan 2009 6,620 Up 222 422,614