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CBOT soya roars to 3-mth high on S. America weather

CHICAGO: Soyabean futures at the Chicago Board of Trade roared back from early-session declines to end at the highest prices in nearly three months as the South American weather outlook continued to keep the market on edge, traders said.

Soyabeans settled 4 to 8-1/2 cents per bushel higher, with March up 6 cents at $5.02-1/4, the contract's highest close since $5.07-1/4 on Oct. 20.

News of widespread weekend rain in dry areas of Brazil sent soyabeans lower initially. But traders said market focus quickly turned to an outlook for warmer, drier conditions later this week.

Salomon Smith Barney Inc. meteorologists said Tuesday that a heat-producing high pressure ridge was expected to intensify across southern Brazil during the next three to five days, pushing temperatures up as high as 100 degrees Fahrenheit.

"The ridging this week will keep all of the rain activity up across the central and northern portions of the (Brazil soyabean) belt," Salomon Smith Barney said in a report. "Therefore, the majority of the southern belt (Rio Grande do Sul, Santa Catarina) will be dry this week."

The ridge may weaken and shift after the weekend, resulting in cooler temperatures and improved rainfall prospects for Brazil's southern soyabean belt, Salomon Smith Barney said.

Rio Grande do Sul, Brazil's third-leading soyabean growing state, has suffered from below-normal rainfall since the planting season began in October. The state's agriculture secretariat said Monday that Rio Grande do Sul has lost more than 7 percent of its soyabean crop and 18 percent of its corn due to the effects of drought.

Brazil is the world's second-leading soyabean producing nation behind the United States. Argentina, the world's third-leading producer, has also suffered from dryness in some crop areas.

The soyabean market continued to draw support from renewed bullishness following a reduced supply outlook conveyed in government reports last week, trader said.

Technicals have turned more bullish over the past week, traders said, and commodity funds have been substantial buyers in recent sessions. March soyabeans have moved above most major chart moving averages, which are among the technical readings followed by funds.

Funds bought at least, 2,500 soyabean contracts on the day, traders said.

"It's very encouraging for the bulls, this performance," one CBOT trader said.

The latest Commitments of Traders reports from the Commodity Futures Trading Commission reflected active fund buying, traders said.

The CFTC said that as of Jan. 11, noncommercial interests, which are primarily funds, held 23,541 long futures contracts in soyabeans and 12,091 shorts, for a net long of 11,450. As of Dec. 28, the net noncommercial long was 5,402 contracts.

Up to late trading, O'Connor & Co. bought about 1,000 March contracts, Prudential Securities bought 800 March, Refco Inc. bought 700 March, Cargill Inc. bought 600 March and 300 May and FIMAT Futures Inc. bought 400 March, pit sources said.

Soyabean futures volume during Monday's pit session was estimated by the CBOT at 60,000 contracts, compared with 66,603 Friday.-Reuters