November 24, 2008

Monday: China soybean futures settle higher on stockpile expectations


China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Monday, still buoyed by market expectations from last week that Beijing will shortly announce plans to prop up agricultural prices.


The benchmark May 2009 soybean contract gained 1.4% to settle at RMB3,262 a metric tonne.


"The market's still talking about the expected increase in stockpiles," said Li Xinghua of Great Wall Futures in Shanghai.


The government has said it will buy 5 million tonnes of soybeans from the northeastern provinces at RMB3,700/tonne to support local prices, and the market expects Beijing to purchase another 5 million tonnes soon.


With government purchases keeping local prices afloat, analysts say importers have an incentive to go for cheaper soybean available in the international market.


Domestic demand is rising ahead of the year-end holiday season, as many soyoil processing plants restart operations and need to replenish their stocks, said Xiao Jun, an analyst with Shanghai JCI, a grain industry consultancy in China.


Analysts expect soybean imports in November and December to average 2.5 million to 3 million tonnes, around the same level as last year.


The dollar was also slightly weaker Monday morning, said Xu Wenjie of Tianma Futures.


Global agricultural markets remain weak, with soybean futures on the Chicago Board of Trade on Friday testing the bottom of a six-week trading range, weighed by the bearish economic outlook and a lack of fresh fundamental support.


In Dalian Monday, corn futures and soymeal futures settled down, but palm oil futures and soyoil futures were slightly higher.


"When it comes to soymeal and corn in particular, weak external markets are still a big influence," Xu said.


Cash domestic soybean prices in Heilongjiang, a major producing province, were largely unchanged Monday from last week.


Analysts said these prices are bound to come under pressure from the government's policies to boost stockpiles.


Open interest in all soybean contracts rose 20,776 lots to 626,846 lots Monday.


Trading volume fell to 593,334 lots from 1,044,192 lots Friday.


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        3,262        Up   45       593,334

Corn             May 2009        1,595        Dn    3       143,312

Soymeal       May 2009         2,376        Dn   12      459,926

Palm Oil        Jan 2009          4,278        Up   76        51,596

Soyoil           May 2009         5,852        Up   90       297,530

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