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CBOT soya hits 2-month high on lower supply outlook

CHICAGO: Soyabean futures at the Chicago Board of Trade surged to their highest levels in over two months on Thursday, responding to a reduced US supply outlook and concerns over the crop status in South America.

Soyabeans settled 7 to 11-1/2 cents per bushel higher, with March up 8-3/4 cents at $4.89, the contract's highest close since $4.89-1/4 on Nov. 8.

Traders attributed part of Thursday's gains to a continued reaction to Wednesday's US Department of Agriculture reports, in which the government reduced estimates for last year's US soyabean crop and supply levels later this year.

On Thursday, weather in South America returned as a trading factor as some forecasters projected warmer and mostly dry conditions for southern Brazil and Argentina, where crops have suffered from lack of substantial rainfall.

Salomon Smith Barney Inc.'s meteorologists projected temperatures climbing into the lower 100s (degrees Fahrenheit) in parts of southern Brazil and Argentina during the middle of next week.

Analysts said persistent dryness since the start of the planting season began could trim the production outlook in Brazil, the world's second-leading soyabean producing nation behind the United States.

Earlier Thursday, Brazil crop analysts Safras e Mercado said Brazil's 1999/2000 soyabean crop may be below 30 million tonnes due to a drought in some areas.

"I think that Brazil has already lost between 1 and 1.5 million (tonnes of soyabeans)... compared with the last estimate," Safras grains analyst Paulo Molinari told Reuters.

Safras previously estimated the Brazil's soyabean crop at 31.27 million tonnes. The USDA's current estimate for Brazil is 31 million tonnes, the same as last year's crop.

In Wednesday's reports, the USDA lowered its estimate of the 1999 US soyabean crop by 30 million bushels to 2.643 billion bushels, and subsequently dropped its projection for US soyabean stocks at the end of the 1999/2000 marketing year by the same amount.

Estimated soyabean supplies at the end of the 1999/2000 marketing year Aug. 31 now stand at 365 million bushels, up slightly from 348 million in 1998/99 and a 7.5 percent cut from the USDA's previous estimate. The USDA slashed ending 1999/2000 corn supplies by an even larger amount - 14 percent.

"I think you're seeing a sea change underway in terms of the market outlook after the USDA reports," said Ben George, a trading specialist at the CBOT. "Supply is not as burdensome as previously thought. People are rethinking positions."

The week's price action has also turned technical patterns more bullish, George said. "Yesterday's activity improved the charts in a dramatic way, and attracted additional technical buying," George said.

Soyabeans have moved above most major chart moving averages, which are among the technical readings followed by funds. At Thursday's close, the 100-day moving average for March soyabeans was $4.89-1/2.

Funds bought at least 4,500 soyabean contracts up to late trading, floor sources said.

In other news Thursday, the USDA's weekly export sales report showed net US soyabean sales during the week ended Jan. 6 at 515,900 tonnes, down 9 percent from the previous week and down 4 percent from the four-week average but within the range of estimates for 350,000 to 700,000 tonnes.

Up to late trading, Prudential Securities bought 1,200 March contracts, Carr Futures bought 800 March, Salomon Smith Barney Inc. bought 700 March and E.D. & F. Man International bought 600 July and 100 May, floor sources said.

In spreading activity, TENCO Commercial Grain bought 200 January and sold 200 March at a price differential of 8 cents.

Soyabean futures volume during Thursday's pit session was estimated by the CBOT at 58,000 contracts, compared to 62,305 Wednesday.-Reuters