December 2, 2005

 

Friday: China soybean futures settle up; bird flu worries ease

 

 

China's Dalian Commodity Exchange soybean futures settled higher Friday, as light buying emerged following no reports of new bird flu outbreaks since Thursday.

 

The benchmark May 2006 soybean contract rose RMB10 to settle at RMB2,546 a metric tonne, after trading between RMB2,534 and RMB2,555/tonne.

 

Total trading volume for soybean futures fell to 209,530 lots from 213,866 lots Thursday. One lot is equivalent to 10 tonnes.

 

The local market has repeatedly suffered losses due to concerns over bird flu since October because the disease kills fowl and reduces demand for feed.

 

In addition, reports of human infection from the disease have made people wary of consuming poultry products.

 

Both price and output for China's poultry and feed have fallen sharply recently, which in turn has dealt a blow to demand for soymeal, a product of soybeans and mostly used as animal feed.

 

China has reported 25 outbreaks of bird flu across the country since October and the government has killed millions of fowl. It has also confirmed three human cases of bird flu, including two fatalities.

 

"The risk (of bird flu outbreaks) remains high, and soybean futures are unlikely to rebound quickly," said a trader at a Dalian-based futures trading company.

 

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 higher.

 

The No. 2 May 2006 soybean contract settled RMB4 higher at RMB2,521/tonne, after trading between RMB2,515 and RMB2,540/tonne.

 

Soymeal futures traded on the exchange also settled mostly higher, helped by some speculative long buying, despite many speculators liquidating their holdings before the market closed, as they were loath to bear any risk over the weekend.

 

The benchmark May 2006 soymeal contract gained RMB15 to settle at RMB2,164/tonne, after trading between RMB2,151 and RMB2,175/tonne.

 

Corn futures traded on the exchange settled higher on some follow-through buying.

 

The most heavily traded September 2006 contract settled RMB13 higher at RMB1,298/tonne, after trading between RMB1,291 and RMB1,306/tonne.