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CBOT soya soars to 4-mth highs on funds, S. America

CHICAGO: Chicago Board of Trade soyabean futures soared to the highest levels in over four months on Thursday, as fears of crop losses in South America and stronger technicals triggered massive fund buying, traders said.

Soyabeans settled 10 to 14-3/4 cents per bushel higher, with March up 13-3/4 cents at $5.27, the contract's highest close since $5.32-1/4 on Sept 10, and the highest close for a spot CBOT contract since last January. Several deferred positions set contract highs.

Forecasts for generally dry conditions into next week for Argentina and southern Brazil continued to fuel bullish momentum, traders said. Strength in meal futures also contributed to soya gains.

"It's a potent combination of funds and dryness in South America," said Victor Lespinasse, floor commentator for AG Edwards & Sons Inc.

Commodity funds bought at least 10,000 soyabean contracts on the day, traders estimated.

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.

Soyabeans in southern Brazil may be under some stress, but haven't yet suffered irreversible damage, Salomon Smith Barney said. However, the persistent dryness was a growing concern as much of the South American soyabean crop neared critical reproductive phases when moisture needs are greatest.

"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 Salomon Smith Barney report said after January's dry days, southern Brazil will need the usually rainy months of February and March to produce significant moisture.

Some analysts have already lowered crop forecasts for Brazil and Argentina, with many favouring a Brazilian crop of 29 million to 30 million tonnes, compared with the current US Department of Agriculture forecast of 31 million.

A regional agriculture secretariat for Brazil said Thursday that production in Parana, Brazil's leading soyabean growing state, was expected to fall to 7.15 million tonnes this year from 7.72 million in 1999 due to extended drought.

FIMAT Futures Inc. bought at least 4,000 soyabean contracts on the day, pit sources said, while Prudential Securities bought 2,000 May, Carr Futures and Goldenberg, Hehmeyer & Co. each bought 1,000 March and Refco Inc. bought 600 March, floor sources said. Cargill Inc. sold 500 March.

The CBOT esimtated soyabean futures volume during Thursday's pit session at 67,000 contracts, above 41,847 Wednesday.-Reuters