November 10, 2008


Monday: China soybean futures settle up on RMB4 trillion stimulus plan



Soybean futures traded on the Dalian Commodity Exchange settled sharply higher Monday, boosted by the government's 4 trillion yuan economic stimulus plan.


China's benchmark May 2009 soybean contract settled RMB85 higher at RMB3,349/tonne, or up 2.6%.


On Sunday, the country's State Council said the government will invest RMB4 trillion by the end of 2010 as part of an economic stimulus plan aimed at boosting economic growth, with an initial investment of RMB100 billion on construction projects in the fourth quarter.


China will also implement value-added tax reform, which will reduce the tax burden on enterprises by RMB120 billion.


The plan helped to support a rebound in agricultural commodities markets, which have been lackluster recently, said Gao Yanrong, an analyst at Dalu Futures Co.


But many analysts said the plan will help to raise sentiment more than actual demand.


"It's hard to tell whether the economy will (be boosted by the plan)," said Cui Ruijuan, an analyst at Guangfa Futures Brokerage.


However, analysts expect demand for vegetable oil to pick up ahead of the year end holidays.


Gao said the market has seen a bottom in the near term, but could fall further in the longer run if global financial woes continue to weigh on demand.


Expectations of a favorable monthly U.S. Department of Agriculture crop production report due out Monday also helped to push up prices.


A Dow Jones Newswires survey of 18 analysts put the average soybean production estimate at 2.916 billion bushels, below the USDA's current forecast of 2.938 billion bushels. The analyst's average soybean yield was 39.2 bushels per acre, below the USDA's 39.5. On average, analysts pegged the new-crop carryout at 189 million bushels, compared to the USDA's current estimate of 205 million bushels.


Open interest in all soybean contracts rose 3,664 lots to 593,396 lots Monday.


Trading volume declined to 737,490 lots from 826,138 lots Friday.


Corn futures, soymeal futures, soyoil futures and palm oil futures all settled higher.


Benchmark palm oil futures touched limit-up during the session.


Following are Monday'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        3,349      Up   85       737,490

Corn           May 2009         1,637      Up   11       155,038

Soymeal      May 2009        2,579       Up   66       676,200

Palm Oil       Jan 2009         4,834       Up  204        43,718

Soyoil          Jan 2009         6,758       Up  240      459,592

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