November 25, 2005

 

Friday: China soybean futures settle lower on selling; corn rises

 

 

China's Dalian Commodity Exchange soybean futures settled lower Friday, as some speculators liquidated their long positions ahead of the weekend while mild fresh short-selling emerged amid frequent outbreaks of bird flu virus.

 

The benchmark May 2006 soybean contract fell RMB9 to settle at RMB2,609 a metric tonne, after reaching a nine-month low of RMB2,598/tonne. Its intraday high was at RMB2,618/tonne.

 

Total trading volume for soybean futures declined to 185,364 lots from 260,856 lots Thursday. One lot is equivalent to 10 tonnes.

 

The frequent outbreaks of bird flu since last month have severely impacted local poultry and feed industries in recent weeks.

 

Poultry and egg prices in many parts of the country have fallen sharply while feed sales have slowed significantly.

 

As a result, feed makers have slowed their purchase of soymeal, leading to a buildup in soymeal stocks at some large soybean crushers.

 

In order to maintain an already lean profit margin, soybean crushers in many regions are said to have raised soyoil prices to compensate for lower soymeal prices.

 

Soyoil and soymeal are the two end products of soybean crushing.

 

Still, some crushers have begun lowering operating rates and some have completely halted crushing activity, local analysts said.

 

"The international soybean market will also feel the pain if China's bird flu can't be contained effectively and in a timely manner," one analyst said.

 

China is the world's largest soybean importer.

 

The country imported 1.90 million tonnes of soybeans in October, 21.4% higher from a year earlier. In the January-October period, soybean imports rose 38% to 21.42 million tonnes, according to the General Administration of Customs Friday.

 

Dalian's No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops but are seldom traded, settled mostly lower.

 

The No. 2 May 2006 soybean contract lost RMB16 to settle at RMB2,589/tonne, after trading between RMB2,565/tonne and RMB2,606/tonne.

 

Soymeal futures traded on the exchange settled lower, mirroring soybean futures.

 

The benchmark May 2006 soymeal contract declined RMB10 to settle at RMB2,217/tonne, after hitting a nine-month low of RMB2,206/tonne. Its intraday high was RMB2,226/tonne.

 

Meanwhile, most corn futures traded on the exchange settled slightly higher amid better prospects for corn exports.

 

China exported 400,797 tonnes of corn in October, more than seven times the volume exported last October. Corn exports in the January to October period nearly tripled from a year earlier to 7.55 million tonnes, according to the customs department.

 

The most heavily traded May 2006 contract settled RMB4 higher at RMB1,250/tonne, after trading between RMB1,246/tonne and RMB1,254/tonne.