🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

China commodities retreat as stimulus expectations pared back

Published 05/07/2016, 02:16 pm
Updated 05/07/2016, 02:20 pm
© Reuters.  China commodities retreat as stimulus expectations pared back
HG
-

* Broad-based falls from industrial metals to agriculture

* Soymeal slides as much as 5.7 pct, rapeseed meal down 5 pct

* China June services activity hits 11-month high

By Manolo Serapio Jr

MANILA, July 5 (Reuters) - Chinese commodities futures dropped on Tuesday after big gains in the prior session, as investors pared back expectations for rapid stimulus measures to spur economic activity in the world's biggest consumer of many raw materials.

The falls were broad-based, from industrial metals to grains, as profit taking emerged after Monday's rally had lifted prices to multi-month highs. Globally traded commodities from oil to copper and gold also retreated along with Asian stocks.

The strength in China's services sector could help offset some of the weakness in its manufacturing activity, economists say, reducing the urgency for more stimulus.

Activity in China's services sector rose to an 11-month high in June, indicating that Beijing is making progress in rebalancing the world's No. 2 economy. were also likely wait for Britain to make the first move in terms of stimulating its economy after voting to leave the European Union, said Vishnu Varathan, senior economist at Mizuho Bank in Singapore.

"A lot of the stimulus that might come through would probably do so with a bit of a lag primarily because a lot of the policymakers elsewhere don't want to jump the gun," he said.

"It's also unfortunate that the post-Brexit rally on stimulus hopes got stretched a bit too far so the correction is, to some extent, self-inflicted."

Futures linked to China's steel sector dropped, with rebar on the Shanghai Futures Exchange SRBcv1 falling more than 4 percent at one point to 2,311 yuan ($347) a tonne.

Meanwhile, iron ore on the Dalian Commodity Exchange DCIOcv1 slipped as much as 2 percent after earlier touching a two-month high.

Coking coal DJMcv1 and coke DCJcv1 were down 2.4 percent and 3.1 percent at midday, respectively.

Soymeal led losses in agriculture, falling as much as 5.7 percent to 3,274 yuan a tonne on Dalian DSMcv1 . The most-traded Dalian soymeal contract hit the highest since at least 2000 on July 1 following a bullish crop report in the United States.

Dalian soybeans DSAcv1 dropped as much as 3.1 percent and rapeseed meal on the Zhengzhou Commodity Exchange CRSMcv1 tumbled by the 5 percent exchange-set maximum. Dalian corn slipped up to 3.5 percent.

Rainy weather over the July 4 holiday weekend in the United States also weighed on corn and soy prices, traders said. U.S. markets are still shut.

A rally in Chinese commodities in April soon turned into a rout after a surge in prices and volumes prompted exchanges to step in to curb speculative activity. ($1 = 6.6679 Chinese yuan)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.