December 10, 2008
Wednesday: China soy futures settle up; favorable policies expected
Soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday with support from market expectations that the government will implement favorable policies.
China's benchmark May 2009 soybean contract settled RMB33 higher at RMB3,001/tonne, or up 1.1%.
Heilongjiang Jiusan Oil and Fat Co. has filed an application to Beijing to ask for government subsidies to help soybean processing plants in major producing areas of the northeast, as the availability of much cheaper imported soybeans are hurting their interests, said analysts.
Soybean processing plants in the northeast use domestic soybeans to produce soyoil for sale in southern consumer areas.
But falling global soybean prices and the government's soybean purchases in the northeast have made domestic soybeans much less competitive than their global counterparts.
Meanwhile, there is rumor circulating in the market that the government may issue corn export quotas for either 3 million tonnes or 5 million tonnes to help ease a domestic supply surplus.
However, Gu Lifeng, corn manager at major grain exporter COFCO Ltd., said the rumor is "unreasonable and unfounded," as falling global commodities prices have driven U.S. corn prices much lower.
"We can't export (corn) even if given the quota" because the prices of U.S. corn arriving in southern Chinese ports are now RMB100/tonne lower than those of domestic corn in the same market, he said.
Analysts said there is limited room for agricultural products to fall further, but Tang Shaoming, an analyst at Tianqi Futures, said there also isn't any sign of funds entering the market aggressively.
The market is likely to consolidate at current levels in the near term, said Xiao Jun, an analyst at Shanghai JCI, a commodities consultancy firm.
Open interest in all soybean contracts fell 5,088 lots to 580,792 lots Wednesday.
Trading volume declined to 1,071,068 lots from 1,276,036 lots Tuesday.
Corn futures, soymeal futures, soyoil futures and palm oil futures all settled higher.
Following are Wednesday'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 3,001 Up 33 1,071,068
Corn May 2009 1,481 Up 2 166,388
Soymeal May 2009 2,171 Up 14 374,170
Palm Oil May 2009 4,736 Up 114 120,244
Soyoil May 2009 5,784 Up 70 422,346