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CBOT meal hits contract highs, soyaoil sharply up

CHICAGO: Soyameal futures at the Chicago Board of Trade surged to contract highs -- as well as an 18-month high in spot positions -- amid heavy fund buying and growing concerns over South American crop losses, traders said.

Soyaoil futures tagged along with rallying soyabeans and soyameal and gained sharply, ending at the highest levels in over eight weeks.

Soyameal ended $3.30 to $4.20 per ton higher, with March up $3.30 at $166.80, the highest close for a spot CBOT meal contract since July 1998. March also set a contract high at $167.80.

Soyaoil settled 0.45 to 0.66 cent per lb higher, with March up 0.63 at 17.11 cents, the contract's highest close since 17.18 on Dec. 1.

Fears that persistent dryness in key growing areas of South America will lead to crop losses continued to fuel bullish sentiment in the CBOT soya complex, traders said.

At the same time, strengthening technical patterns lured in more fund buying. Funds were estimated to have bought at least 4,000 meal contracts and 2,500 soyaoil contracts on the day. Funds have been heavy buyers in meal futures over the past two weeks and now hold a sizable net long position, traders said.

Southern Brazil received modest, unexpected rains earlier this week, but mostly dry conditions prevailed, meteorologists said. The dryness was of increasing concern because much of the soyabean crop neared its critical reproductive phase when moisture needs are greatest.

Salomon Smith Barney Inc. said a high pressure ridge was expected to intensify across southern Brazil and Argentina over the weekend and early next week, resulting in mostly dry conditions and warmer temperatures.

Temperatures ranging from 95 to 100 degrees Fahrenheit were projected Sunday through Tuesday across Brazil's southern soyabean belt and over much of Argentina's corn and soya belt.

"Soil moisture levels will be declining during the next seven days on account of the drier-than-normal conditions and very warm temperatures," Salomon Smith Barney Inc. said in a report Thursday.

The report said "substantial" rain is needed in February and March to keep up with crop moisture demands.

Soyaoil futures fell initially Thursday in sympathy with Malaysian palm oil, as that market sank overnight amid talk that India -- one of the world's top vegoil importers -- would again raise its import duty on refined edible oils.

Refco Inc. bought 800 March meal contracts and 200 July, Merrill Lynch bought 600 March and 300 May and Term Commodities sold 800 March, floor sources said.

In soyaoil, Refco bought 800 March, E.D. & F. Man International bought 900 March, Cargill Investor Services bought 500 March and 500 May, Iowa Grain sold 800 March and 400 May and Produce Grain sold 600 March and 200 May.

Soyameal volume during Thursday's pit session was estimated by the CBOT at 24,000 contracts and soyaoil volume was estimated at 22,000 contracts.-Reuters