Chinese soya complexes weaker

China's Dalian soya complex in sank deeper early on Monday, with the dollar's rebound worrying participants that investment funds might pull out of commodities futures. Before a setback on Friday, the recent wave of buying by funds and speculators had helped push up Chicago soya futures and Dalian complex to highs not seen for months. Some Dalian soyameal contracts plunged by their 4 percent daily limits.
Dalian soya contracts lost as much as 112 yuan ($13.6) a tonne, while the CBOT front month May were down by 4-3/4 US cents per bushel at $6.44-1/4. "I suspect funds are selling because the dollar is firm," said an official at a crusher in China.
"Funds were buying because the dollar was weak. Buying commodities was a good hedge against the weak dollar." During Asian on Monday, the dollar rose to its highest since March 8 against the euro, supported by expectations the US authorities may use more aggressive language on interest rates this week.
Chinese soya complex suffered a setback already on Friday amid fears that Beijing might raise interest rates for the first time since October.
This led to a slump in Chicago futures later in the day. The traders said there were also rumours that Chinese crushers were keen to deliver soyameal, while speculators were trying to avoid taking physical cargoes.
In the physical soya market, sharp falls in meal prices prompted talk of soya cancellations, the traders said. Many crushers wondered whether they could maintain their margins, because the Chicago rally and high freight rates had pushed up the cost of soya imports.
The falls in physical meal prices by as much as 100 to 150 yuan ($12 to $18) a tonne in just two days reminded many of a crisis last year when crushers ran out of cash to pay for high-priced South American cargoes booked months in advance.
Asked about the talk, the first crusher official said: "It is possible, but I don't think its default. I would suspect it's just a wash-out (selling back to the supplier at a fee)."
Another trader had heard several South American soya cargoes had been switched to the US Pacific Northwest, a closer origin, as they would arrive in April before many South American cargoes were expected to begin landing in China this season.
"Demand for meal is quite OK," said another trader in Shanghai. "But most feed mills are bearish in terms of prices. They are buying from hand-to-mouth."
The traders said they had seen almost no interest in booking more soya cargoes from South America, though they estimated Chinese buyers had covered only about half of May positions.