November 4, 2008


Tuesday: China soybean futures fall with soymeal on melamine concerns



China's soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday, tracking a fall in soybean meal prices as the market remains concerned melamine contamination may have expanded to the feedmeal sector.


The benchmark May 2009 soybean contract settled RMB41 lower at RMB3,348 a metric tonne, or down 1.2%.


As the melamine contamination scare expands beyond milk, industry experts are concerned it may have been mixed with feedmeal to create the appearance of being protein-rich.


Melamine is an industrial chemical normally used to make plastics and can lead to severe kidney problems in humans if ingested in large amounts. Soy meal and corn are used as feedmeal.


Traders were buying soybean oil futures and short-selling soy meal futures due to the melamine concerns, said Gao Yunyue, an analyst at Dadi Futures Brokerage Co.


The open interest in all soybean contracts rose 2,436 lots to 590,766 lots Tuesday.


Trading volume fell to 1,295,992 lots from 1,300,034 lots Monday.


However, analysts don't expect the melamine issue to have a lasting impact on the feedmeal sector, while the weak demand amid ample supply remains the main factor in deciding corn and soy meal prices.


Although near-term feedmeal demand could be affected by the issue, it is easily forgotten after a while, said a local feedmeal trader.


Corn and soy meal futures settled lower, but soy oil and palm oil futures settled mostly higher.


Corn futures could be consolidating within a RMB1,580-RMB1,700/tonne range in the long term, said Wang Cheng, an analyst at Nanhua Futures.


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         3,348       Dn   41    1,295,992

Corn              May 2009         1,635       Dn   12      187,288

Soy Meal        May 2009         2,595       Dn   96      815,436

Palm Oil          Jan 2009         4,742        Up   64      130,566

Soy Oil           Jan 2009          6,636        Up   12      785,792

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