December 4, 2008

Thursday: China soy futures settle down on falling freight fees and crude oil prices


China's soy futures traded on the Dalian Commodity Exchange settled lower Thursday (Dec 4) on falling freight fees and crude oil prices.


The benchmark May 2009 soy contract settled RMB84, or 2.7 percent, lower at RMB3,050/tonne.


Sharply lower freight fees mean imported soy cost less, making domestic soy less competitive, said Liu Xinghua, an analyst at Great Wall Futures Co.


The benchmark contract has been supported by the government's purchase of domestic soy, and was resistant to downward pressure recently.


But government buys have not seem to affect the market much as progress has been slow while processing plants have stayed on the sidelines due to high prices, analysts said.


The big gap between the May and September contracts also spurred some arbitrage interest as traders sold expensive May contracts and bought cheaper September contracts.


A downward trend in other commodities affected sentiment for agricultural products as well, promising a generally gloomy outlook, said Xu Wenjie, an analyst at Tianma Futures Co.


Benchmark copper, zinc, aluminum and rubber futures traded on the Shanghai Futures Exchange all hit limit-down during the session.


Analysts said soy futures at the Chicago Board of Trade are being pressured to fall more on a weak consumption forecast, based on a generally bearish economic outlook.


Open interest in all soy contracts rose 64,228 lots to 694,130 lots Thursday.


Trading volume rose to 1,303,290 lots from 585,334 lots Wednesday.


Corn futures settled mostly higher, while soymeal, palm oil and soyoil futures settled mostly lower.


Edible oil futures, corn futures and soymeal futures were mostly higher in the early session, but edged lower as soybean futures tumbled.


Thursday's settlement prices in yuan per tonne for benchmark contracts and volume for all contracts in lots (one lot is equivalent to 10 tonnes):


Contract       Settlement        Price       Change      Volume

Soy              May 2009         3,050       Dn   84    1,303,290

Corn            May 2009         1,520        Up    5       285,958

Soymeal       May 2009         2,223        Dn   10      706,416

Palm Oil        May 2009         4,672        Dn    6       111,560

Soyoil           May 2009         5,910        Dn   60       520,082
US$1=RMB6.8818 (Dec 4)

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