October 31, 2011
China's agricultural products futures begin to drop
Agricultural commodities futures on Dalian and Zhengzhou commodity exchanges opened significantly higher on Friday (Oct 28), then began to slide and some even dropped to a negative territory in absence of positive fundamental cues.
Initially, it was boosted by an overnight rally of stock and commodity markets in the US and European countries.
China's tightening monetary policy showed relaxation signs and hearsay also went that the central bank might reduce required reserve ratio in the fourth quarter. The uncertain outlook for the monetary policies also increased wait-and-see attitudes on the commodity market.
Soy futures traded on the Dalian Commodity Exchange opened higher before going downward as the fundamentals haven't improved. The most actively traded contract for September delivery dipped 0.31% to RMB4,440/tonne (US$698.98) while the May soy oil contract ended 0.15% lower at RMB9,336/tonne (US$1,469.75).
The Ministry of Commerce and the China National Grain and Oils Information Center predicted that China's soy imports would not rise sharply in the following two months. Meanwhile, global stocks are still high and supply is adequate as soy in the US are coming onto the market.