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CBOT soya notches 3-month high on S America dryness

CHICAGO: Soyabean futures at the Chicago Board of Trade ended higher Tuesday as fears that dry conditions could trim South American soyabean production sent the market to its highest levels in over three months, traders said.

Soyabeans settled 3-1/2 to 6-1/2 cents per bushel higher, with March up 5 at $5.17, the contract's highest close since $5.17-3/4 on Oct. 13.

Meteorologists continued to project only light, scattered rainfall for the rest of the week for southern Brazil and much of Argentina, the driest areas of South America's soyabean belt.

Soyabean acreage in those areas has suffered from below-normal precipitation since the start of the planting season in mid-October, and the crop is approaching its critical reproductive phase, when moisture needs are greatest.

"Dry weather is once again becoming the trend after many of the driest areas of Argentina and a good portion of the dry areas of southern Brazil saw decent rains occur about a week ago," said John Dee, agricultural meteorologist for Global Weather Monitoring. "The dry weather will become more of a concern, especially as the crops are entering into the flowering stage in many places."

Many analysts have already scaled back their forecasts for South America's soyabean crop, with projections for Brazil ranging from 29 million tonnes to 30 million, compared to the current US Department of Agriculture estimate of 31 million.

Brazil and Argentina are the world's second- and third-leading soyabean producing nations behind the United States.

Stronger technical patterns continued to fuel growing bullishness in the CBOT soya complex, traders said. The stronger technicals have prompted active commodity fund buying over the past two weeks, and funds were estimated to have bought at least 3,000 soyabean contracts Tuesday, floor sources said.

"You've got weather working for beans, and the funds bought it," said Victor Lespinasse, floor commentator for AG Edwards & Sons Inc. "My objective is at least $7.50 in July beans" in the coming months.

July soyabeans closed at $5.33-3/4 Tuesday.

Other traders placed near-term technical resistance for March soyabeans at $5.18 and $5.19-1/2.

Up to late trading, Refco Inc. bought 600 March contracts, FIMAT Futures Inc. bought 500 March, Cargill bought 300 May and sold 200 March, Produce Grain bought 200 March and 300 May, O'Connor bought 400 March and ADM Investor Services sold 300 March and 100 May, pit sources said.

In options, Term Commodities bought 500 March $5.25 calls and FIMAT Futures Inc. bought 500 March $4.75 puts. Soyabean futures volume during Monday's pit session was estimated by the CBOT at 42,000 contracts, compared to 48,068 Monday.-Reuters