December 17, 2008

Wednesday: China soy futures settle higher on short-covering

China's soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday on short-covering as traders exited the market ahead of a possible cut in crude-oil output.


The benchmark May 2009 soybean contract settled RMB40 higher at RMB3,075/tonne, or up 1.3%.


The Organization of Petroleum Exporting Countries meets later Wednesday in Oran, Algeria, where it might formally announce its production decision.


OPEC Secretary General Abdalla Salem El-Badri said that the group had "almost" reached agreement on a cut of about 2 million barrels a day.


An announcement along expected lines could lead to a sell-off as market players usually "buy ahead of news and sell once it is confirmed," said Chu Jianhong, an analyst at Chinatex Grains & Oils Import & Export Corp.


Tu Xuan, an analyst at commodities consultancy firm Shanghai JCI, said that the availability of cheaper imported soybeans will continue to curb demand for domestic soybeans, which may push prices lower after the current rebound.


Analysts expect imported soybeans in December to reach 3 million tonnes, compared with 2.93 million tonnes in the same month last year.


Open interest in all soybean contracts fell 14,010 lots to 491,026 lots Wednesday, while trading volume declined to 448,178 lots from 552,814 lots.


Corn futures, soymeal futures, palm oil futures and soyoil futures all settled higher.


Feedmeal demandfor corn and soymeal is expected to be higher ahead of year-end holidays, but expectations of weak consumption after the holiday season may have an impactprices later, said analysts.


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         3,075     Up   40     448,178

Corn             May 2009         1,479      Up    5     198,826

Soymeal        May 2009         2,299      Up   40    567,444

Palm Oil         May 2009         4,770      Up   42      90,404

Soyoil            May 2009         5,808      Up   58    283,194

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