December 16, 2008

Tuesday: China soy futures settle down; resistance at RMB3,100

Soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday in a partial correction after rising for six consecutive sessions.


The benchmark May 2009 soybean contract settled down RMB51, or 1.7%, at RMB3,035 a metric tonne.


Resistance is expected at RMB3,100/tonne due to high soybean imports and a lack of fresh positive news to drive further gains, said Shen Enxian, an analyst at China International Futures Co.


A choppy performance on the Chicago Board of Trade also failed to give the market any clear trading guidance.


Meanwhile, although soybean contracts recovered some of their early losses on the news that China has scrapped its value-added tax on soybean exports, analysts said the move is unlikely to have much impact.


The Ministry of Finance said Tuesday that the country had eliminated the tax on Dec. 1 to reduce pressures from ample domestic supply.


However, Li Honglei, an analyst at Nanhua Futures Co., said the impact would likely be limited as the country is not a big exporter.


China is the world's biggest non-genetically modified soybean producer, and most of its non-GM soybeans are exported to southeast Asia to make products such as bean curd.


But non-GM soybeans have a limited share of the global market, and China only exported 456,468 tonnes of such soybeans in 2007.


Open interest in all soybean contracts fall 13,736 lots to 505,036 lots Tuesday.


Trading volume declined to 552,814 lots from 841,004 lots Monday.


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


Benchmark soymeal futures recovered into positive territory after the news of the tax cut, but couldn't sustain the gains against the broadly bearish sentiment.


Tuesday'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         3,035       Dn   51      552,814

Corn             May 2009         1,474        Dn   10     265,828

Soymeal        May 2009         2,259        Dn    9      423,422

Palm Oil         May 2009         4,728        Dn  132    104,066

Soyoil            May 2009         5,750        Dn  142    291,620

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