December 5, 2008

Friday: China soy futures settle down on weak demand, ample supply


Soybean futures traded on the Dalian Commodity Exchange settled sharply lower Friday on a gloomy global economic outlook and weak demand amid ample supply.


The benchmark May 2009 soybean contract settled RMB142 lower at RMB2,908/tonne, or down 4.7%.


The contract opened below the important RMB3,000/tonne psychological support level and stayed 5% limit-down for most of the session.


Analysts said the economic recession will damp demand for commodities, while big falls in outside markets, including crude and metals, has further deepened the panic in the overall commodities market.


A fall in crude oil prices to a 47-month low and a tumble on the Chicago Board Of Trade overnight contributed to the fall in soybeans.


Weak demand for soybeans was reflected in a report by the U.S. Department of Agriculture, which said total weekly soybean export sales were a net 364,500 tonnes for the week ended Nov. 27. Sales for 2008-09 were a net 359,800 tonnes, a marketing year low. Analysts had forecast sales between 500,000 and 700,000 tonnes.


An aggressive rate cut by the European Central Bank failed to help sentiment much, as "the more they cut, the more the public will feel that the situation is worse than they expected," said a local trader.


Open interest for all soybean contracts fell 17,456 lots to 676,674 lots.


Trading was very light, with volume tumbling to only 283,792 lots from 1,303,290 lots Thursday.


Corn futures, soymeal futures, palm oil futures and soyoil futures all settled sharply lower. Benchmark edible oil futures touched limit-down during the session as well.


Corn cash traders stayed on the sidelines as an increasing volume of new corn was entering the market.


The market remains concerned about the outlook for pork consumption after the year-end peak consumption season, said Tianqi Futures in a note.


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        2,908      Dn  142     283,792

Corn            May 2009        1,468       Dn   52     623,484

Soymeal       May 2009        2,134       Dn   89     744,378

Palm Oil        May 2009        4,452       Dn  220      44,100

Soyoil           May 2009        5,646       Dn  264     161,116

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