November 28, 2008

Friday: China soybean futures down on shaky oil, global markets


China's soybean futures traded on the Dalian Commodity Exchange fell Friday, taking cues from shaky crude oil and uncertain global markets, with even Beijing's massive interest rate cut failing to extend its tepid gains from Thursday.


The benchmark May 2009 soybean contract lost 1.4% to settle at RMB3,226 a metric tonne.


The financial markets remained unstable Friday and the soy complex faltered even as oil appeared to head for a weak rebound.


"The market is unsure which direction to go," said Li Panfeng, of Beite Futures Co. "On the one hand, there are strong supportive government policies (of buying for stockpiles to prop up cash prices), but the market's also wary of the pressure from external markets."


Traders in Dalian have largely shrugged off the effects of Beijing's 108-point interest rate cut Wednesday, after somewhat muted rallies across commodities Thursday.


"The fact that such a big cut didn't make a bigger impact shows that the market is really pessimistic right now," Li said.


Global grain prices aren't likely to recover in the near term because of overall macroeconomic weakness, Barclays Capital said in a note Friday.


"Across grains, wheat fundamentals look weak, characterized by an anticipated global record harvest, while we are more positive on corn and soybeans with demand buoyed by feed and biofuel use," Barcap said.


Crude oil is linked to soybeans because soybean oil is used to make biodiesel and because funds often trade in a basket of commodities.


Benchmark May 2009 soybean should stabilize around RMB3,300/tonne, Li said.


Corn, soybean meal and vegetable oil futures all settled lower Friday.


Domestic cash soybean prices in Heilongjiang, a major producing province, were slightly down from a week ago, gravitating toward RMB3,400-3,500/tonne.


The open interest in all soybean contracts rose 12,808 lots to 606,510 lotsFriday.


Trading volume rose to 544,502 lotsfrom 346,838 lots Thursday.


Friday'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         3,226       Dn   47     544,502

Corn             May 2009         1,562        Dn   13     288,974

Soymeal        May 2009         2,356       Dn   40     535,300

Palm Oil         May 2009         4,776       Dn   74       89,962

Soyoil            May 2009         6,178       Dn   74      443,014

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