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CBOT soyabeans end at 2-week lows on Brazil rains

CHICAGO: Soyabean futures at the Chicago Board of Trade tumbled to the lowest levels in more than two weeks on Thursday, as a wetter outlook for Brazil's soyabean belt doused traders' worries over possible severe crop losses.

Soyabeans settled 5-3/4 to 8 cents per bushel lower, with March down 6-1/2 at $5.01, the contract's lowest close since the same settlement on Jan 19.

Widespread rains expected over southern Brazil by the weekend should provide soyabean ground with some relief from persistent dryness and remove some of the doubts over the outlook for this year's South American crop, meteorologists said.

Weather Services Corp. projected rainfall of 1/2 to 1-1/2 inches starting Thursday over most of Parana and Rio Grande do Sul, two of Brazil's top soyabean growing states. Isolated amounts of up to 2 inches were possible in some areas.

"Some production losses have already occurred due to previous dryness, but a current turn to a wetter pattern is benefiting surviving crops with the outlook now improving," Weather Services said in a report Thursday.

Dry conditions in southern Brazil and Argentina since the start of the planting season likely have reduced some of the crop's yield potential, analysts said.

The US Department of Agriculture projected the 2000 soyabean production in Brazil -- the world's second leading soyabean growing country behind the United States -- at 31 million tonnes, equal to a year ago. But many analysts believe the crop is closer to 29 million to 30 million tonnes, which is still relatively large.

"Production potential has at least stabilised, and maybe gone up a bit," said Jack Scoville, a trader with Price Futures Group in Chicago. "But Rio Grande do Sul does remain a problem area. It's still dry there."

Scoville said the soyabean market still had good technical support around $5.00 in March, despite the contract's brief foray below that level Thursday. Commodity funds were believed to still hold a net long position in the market.

Government export readings suggested stronger foreign demand, traders noted. The US Department of Agriculture's weekly export sales report, released early Thursday, listed net US soyabean sales for the week ended Jan. 27 at 391,800 tonnes, more than twice the previous week's level but 1 percent below the four-week average. Expectations ranged from 250,000 to 400,000 tonnes.

In export-related news overnight, traders in Asia said China may resume buying US soyabeans after the Chinese New Year if US prices pull back further. Many parts of China will be shut for the next two weeks to celebrate the lunar new year.

Up to late trading, funds sold at least 2,000 soyabean contracts, traders said. E.D. & F. Man International sold 300 May and 200 July and Carr Futures sold 300 March.

Soyabean futures volume during Thursday's pit session was estimated by the CBOT at 55,000 contracts, compared with 34,846 Wednesday.-Reuters