October 30, 2008
Thursday: China soybean futures settle higher helped by equities, crude
China's soybean futures traded on the Dalian Commodity Exchange settled higher Thursday, helped by gains in equities and crude oil.
The benchmark May 2009 soybean contract settled RMB90 higher at RMB3,380/tonne, or 2.7%.
The rise in Asian stock indexes and crude oil's regain of the US$70-a-barrel level Thursday helped push up agricultural commodities and vegetable oil prices in major Asian markets. Another round of joint rate cuts by central banks helped prop markets around the world as the move is expected to boost liquidity, said analysts.
The benchmark January contract on Bursa Malaysia Derivatives traded MYR78 higher at MYR1,513/tonne at midday. Earlier this week, the contract fell to a three-year low of MYR1,331.
Still, the gains don't signal a turn around in the commodities market, as the key factor of an overall improvement in the global economy remains unclear, said Xiao Jun, an analyst at commodities consultancy firm Shanghai JCI.
There is speculation in the market that China may hike soybean import tariff to as much as 9% from 3% to prevent local markets getting flooded with supplies, said traders.
Some said levying a 9% tax will go against rules laid down by the World Trade Organization, and a 5% tax is more likely.
Tumbling global soybean prices due to the financial crisis amid a bumper harvest, has brought the imported price of the commodity lower than the domestic ones, which the government aims to protect by paying farmers higher purchase prices.
A finance ministry official declined to comment.
The government wants prices of agricultural products to be stable to help protect farmers' income, said Dong Shuangwei, an analyst at Capital Futures.
He expected the market to be more volatile going forward.
Open interest in all soybean contracts rose 1,392 lots to 594,688 lots Thursday.
Trading volume fell to 1,581,366 lots from 1,588,784 lots Wednesday.
Corn futures, soymeal futures, soyoil futures and palm oil futures settled higher.
Benchmark soyoil futures and palm oil futures touched their upper limit near the closing bell.
Thursday'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 3,380 Up 90 1,581,366
Corn May 2009 1,666 Up 9 205,706
Soymeal Jan 2009 2,893 Up 68 878,998
Palm Oil Jan 2009 4,542 Up 154 89,188
Soyoil Jan 2009 6,380 Up 230 565,228