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CBOT soya products end higher on weather, funds

CHICAGO: Chicago Board of Trade soyameal and soyaoil futures ended higher on Tuesday on commodity fund buying and strong gains in soyabeans amid concerns over the weather in the US Midwest growing region.

CBOT soyameal settled 30 cents to $2.10 per ton higher, with May up $1.20 at a lifetime high of $172.50. May earlier hit a contract high of $173.50, up from the previous $173.

Soyaoil was 0.36 to 0.60 cent per lb higher, with May up 0.55 at 17.02 cents, its best close since touching 17.34 cents on Jan. 28.

Commodity funds bought 2,500 soyameal contracts and 5,000 soyaoil contracts on the day.

"There was good short covering in the oil," a CBOT trader said. "Both oil and meal are also getting support from beans."

Both products were principally driven higher by strong gains in soyabeans, which rose by 6-3/4 to 10 cents on Tuesday and by 12-1/2 to 13-1/2 cents on Monday following the US government forecast of drought this spring in the Midwest.

Unseasonably warm and dry winter weather in the key corn and soyabean growing region led to low soil moisture levels.

The government has blamed the warm weather and lack of moisture on the La Nina phenomenon in the Pacific Ocean that limits rainfall and leads to warmer hemispheric temperatures.

The US Department of Agriculture has estimated that in 1999, drought caused some $1.35 billion in farm income losses.

Analysts said that while it was too early to panic over the dry conditions, it was necessary to build a weather premium into the market to reflect the uncertainty.

CBOT traders said soyabeans were also supported by a strong finish in corn and soyaoil futures. Commodity funds bought 10,500 corn contracts, while soyaoil saw short covering.

Delays in the Brazil harvest due to wet weather led some traders to hint at possible increased overseas demand for US soyabeans, especially for near-term shipments that were unlikely to be met by Brazil.

Brazilian meteorologist Somar on Tuesday said soyabean areas in the vast centre-west farmland tract, which accounts for more than 40 percent of the national crop, would see thunderstorms and showers with rising temperatures for the rest of the week.

Light rains were expected over northern soya areas of key producer Rio Grande do Sul in the next few days. In soyameal, O'Connor bought 2,000 May contracts, RJ O'Brien bought 300 May, 500 July, Prudential Securities bought 100 May, 200 July, Salomon Smith-Barney bought 400 May.

In soyaoil, Goldenberg Hehmeyer bought 1,000 July, E D&F Man International bought 1,200 May, Prudential Securities bought 400 July, 500 May, RJ O'Brien bought 300 May, 400 July, Carr Futures bought 200 July, 300 May, Produce Grain bought 300 May.

Soyameal futures volume was estimated by the CBOT at 34,000 lots, compared to 36,687 traded on Monday.

Soyaoil volume was estimated at 32,000 contracts, compared to 17,464 traded Monday. -Reuters