December 3, 2008
Wednesday: China soy futures settle lower as demand concerns linger
Soy futures traded on the Dalian Commodity Exchange settled lower Wednesday (Dec 3), taking their cues from cheaper imports and worries about falling domestic demand.
The benchmark May 2009 soy contract lost 0.2 percent to settle at RMB3,134 a tonne.
The soy complex faltered as oil still appeared weak.
"Soy has been stabilizing for a while, but now it's looking for a clear direction," said Li Honglei of Nanhua Futures. "There's some pressure on soy prices to go lower, as demand is a bit weak and import prices are still going down quite fast."
The government's plan to stockpile soy at RMB3,700/tonne may not be enough to bolster prices, since the plan only takes effect around February and more downside is expected from cheap imports in the interim, Li said.
Soy futures on the CBOT ended lower Tuesday on technical weakness, outside pressure and demand concerns.
Crude oil losses and news of South American crops being aided by much needed rainfall over the past few days also weighed on soy prices, AgriCharts said in a report.
"Across the grains, wheat fundamentals look weak, characterized by an anticipated global record harvest, while we are more positive on corn and soy, with demand buoyed by feed and biofuel use," said Barclays Capital.
Corn, soy and vegetable oil futures also settled down.
Spot soymeal prices are trading around RMB3,050/tonne, Li said, which is expected to provide some support to futures.
Cash domestic soybean prices in Heilongjiang, a major producing province, were largely unchanged from last week.
Open interest for all soy contracts rose 5,714 lots to 629,902 lots.
Trading volume rose slightly to 585,334 lots from 584,226 lots Tuesday.
Wednesday's settlement prices in yuan a tonne for benchmark contracts and the volume for all contracts in lots (One lot is equivalent to 10 tonnes):
Contract Settlement Price Change Volume
Soybean May 2009 3,134 Dn 5 585,334
Corn May 2009 1,515 Dn 9 252,130
Soymeal May 2009 2,233 Dn 29 357,350
Palm Oil May 2009 4,678 Dn 6 87,188