December 31, 2008

Wednesday: China soy futures settle down; market cautious before holiday

Soybean futures traded on the Dalian Commodity Exchange settled slightly lower Wednesday, as the market was cautious ahead of the New Year holiday.


The benchmark May 2009 soybean contract settled RMB8 lower at RMB3,366 a metric tonne.


Traders were cautious during the last trading session of the year as the Chicago Board of Trade will be open Friday while Chinese markets will remain closed that day.


"Traders were either cutting their positions or short-covering to exit the market, as they are not sure of the market trend after the New Year," said Wang Xiaoguang, an analyst at Galaxy Futures.


Dryness in Argentina's major soybean producing areas and stable domestic cash prices helped support the market.


Open interest for all soybean contracts fell 14,168 lots to 366,690 lots.


Trading volume declined to 522,716 lots from 691,192 lots Tuesday.


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


Weaker crude oil prices and falling palm oil futures in Malaysia plagued vegetable oil futures, said Tianqi Futures in a note.


Corn futures were at nearly one-month highs as traders weren't active in setting up short positions after the government announced a series of purchase plans in the past few months to support prices.


The government will soon issue a corn export quota of 500,000 tonnes for 2009 to ease domestic supply pressure, said several industry participants Tuesday.


But analysts don't expect the exports to help boost domestic prices much due to lower global prices.


Wednesday's settlement prices in yuan a metric tonne for benchmark contracts and the volume for all contracts in lots (One lot is equivalent to 10 tonnes):

Contract         Settlement         Price        Change      Volume

Soybean         May 2009          3,366        Dn    8      522,716

Corn              May 2009          1,542         Up    5      199,508

Soymeal         May 2009          2,457        Up   26      384,726

Palm Oil          May 2009         4,994         Dn  124     170,236

Soyoil             May 2009         6,076         Dn   98      283,190


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