China soymeal futures plunge amid macro selloff, trade warnings

Soymeal futures in China slumped on Friday as traders dumped positions amid a wider sell-off in the global market, with...

Soymeal futures in China slumped on Friday as traders dumped positions amid a wider sell-off in the global market, with Chinese futures exchanges adding to the move as they issued statements warning of market volatility, sources said.

Soymeal futures contracts on the Dalian Exchange fell 3-5% along the curve on Friday to their lowest level in more than three weeks, with March futures down 4.11% to CNY3,427/mt ($531/mt).

“It was largely following the overseas market overnight,” said a futures trader at a major trading house.

Several other trade sources echoed that assessment.

CBOT soybean futures dropped 15-20 c/bu on Thursday and continued to slide on Friday, down 18-25 c/bu in the early session.

Global equity and commodity prices have nosedived at the end of the week against the backdrop of rising yields in US treasuries, attracting funds to flock to the safer asset and abandon positions perceived to be riskier.

The moves meant four futures exchanges in China issuing statements that warned of increased market volatility, shaking confidence further and adding to the selloff.

“Market prices have fluctuated greatly in recent days. All member units are requested to strengthen investor education and risk prevention, and remind customers to participate in futures transitions rationally and compliantly,” Dalian Commodity Exchange said.

This was interpreted by traders as a signal to calm the market forcing traders to exit long positions.

“Prices rose too quickly. Everyone wants to slow down,” one trader said.

What to read next
As we approach the end of the first quarter after the termination of the quarterly European ferro-chrome benchmark, Fastmarkets looks at what has happened since the benchmark ended – and what could happen next.
Rapidly increasing export volumes of Chinese steel sold at lower prices are significantly lowering sentiment across key global ferrous markets, trade sources told Fastmarkets the week to Thursday August 1
Fastmarkets has corrected its MB-STE-0523 Steel scrap shredded auto scrap, consumer buying price, delivered mill, $/gross ton, weekly composite, which was published incorrectly since June 14.
China’s lithium prices continued to trend downward amid weak demand and futures weakness over the week to Thursday July 25
Persistently high import volumes of lithium carbonate into China have intensified oversupply in the country's domestic market for the material at a time when demand remains weak, sources told Fastmarkets on Tuesday July 23
Feedback was received during the consultation period of an immaterial nature that would not impact the result of price assessments. Therefore, while no material changes will be made to the methodologies at this stage, clarification indicating that the Effective List price treats changes in annually established discounts during the year as changes in the price. […]