October 21, 2008

     

Tuesday: China soybean futures settle up; mild rise shows market cautious

           

        

China's soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, but the rally moderated after a surge in earlier sessions.

 

The benchmark May 2009 soybean contract settled RMB31, or 0.9%, higher at RMB3,361/tonne.

 

The contract opened sharply higher, but edged lower over the course of the session.

 

China's policy of purchasing soybeans and grain to boost prices has helped soybean prices rebound after overselling amid global financial woes.

 

But traders said they don't think the measure can have a sustainable impact on the market.

 

Traders said the government could purchase 1 million-1.5 million tonnes of soybeans, which pales in comparison with annual imports of nearly 30 million tonnes.

 

"The purchase doesn't address the fundamental problem" of increasing global supply, said Shen Enxian, an analyst at China International Futures Co.

 

There aren't any signs yet that the overall commodities market is stabilizing, so traders will remain cautious, he added.

 

Open interest in all soybean contracts rose by 75,866 lots to 668,248 lots Tuesday.

 

Trading volume rose to 2,676,320 lots from 241,880 lots Monday.

 

Analysts said the high volume and higher open interest show traders have increasingly divergent opinions about the short-term trend, which may trigger more volatility in the market.

 

Corn, soymeal, soyoil and palm oil futures settled mostly lower.

 

Tuesday's settlement prices in yuan a metric tonne for benchmark contracts and volume for all contracts in lots (One lot is equivalent to 10 tonnes):

 

Contract         Settlement         Price        Change      Volume

Soybean         May 2009          3,361        Up   31    2,676,320

Corn              May 2009          1,674        Dn   24       525,096

Soymeal         Jan 2009           2,736        Dn   30       931,058

Palm Oil          Jan 2009           4,902        Dn  122      106,166

Soyoil             Jan 2009           6,500        Dn  120      632,906