20000109

CBOT soya ends at 4-week highs on weather jitters

CHICAGO: Soyabean futures at the Chicago Board of Trade ended on Friday at their highest levels in over four weeks as dryness in South America stoked trade concerns over potential crop losses in one of the world's major soyabean regions.

Soyabeans settled 3 to 4-1/2 cents per bushel higher, with March up 3-1/4 at $4.78-3/4, the contract's highest close since $4.79-1/2 on Dec. 8.

Prices eased earlier in the session, partly in response to forecasts showing the southern half of Brazil's soyabean belt, as well as some of Argentina, will receive some rain over the weekend or early next week. Crops in those areas have suffered recently from below-normal rainfall.

But anticipated rains were not expected to completely alleviate the dry soils in key growing areas of South America, such as the state of Rio Grande do Sul in southern Brazil, meteorologists said.

Weather Services Corp. projected mostly dry conditions or just isolated showers in Rio Grande do Sul through Sunday, with temperatures climbing to 95 to 100 degrees Fahrenheit. Episodes of scattered showers and thunderstorms bringing 1/2 to 1-1/2 inch of rain were possible Monday through Wednesday.

"Rain is needed for developing soyabeans in Rio Grande do Sul, parts of western Parana and the southern Mato Grosso," Weather Services Corp. said in a report Friday. "Hot, dry weather impacts corn in southern Brazil. Significant production losses can be expected."

CBOT traders said soyabean prices likely have limited downside for at least the next week, as the market maintains "weather premium" to account for potential weather-related production shortfalls in South America. The soyabean crop was nearing its critical reproductive phases in late January and February, when moisture needs are most intense.

"People are going to be a little jittery over South American weather," said Brian Scott, a trader with R.J. O'Brien & Associates at the CBOT.

Brazil and Argentina are the world's second- and third-leading soyabean producing nations behind the United States. Both have had drier-than-normal conditions since the planting season began in mid-October.

The weather concerns, combined with stronger technical patterns, have prompted commodity funds to add long positions in soyabean futures this week, traders said. Funds were estimated to have bought about 2,000 soyabean contracts up to late trading, traders said.

But soyabean futures have yet to breach technical resistance around $4.81 in the March contract, traders said.

Earlier Friday, the US Department of Agriculture's weekly export sales report listed net US soyabean sales during the week ended Dec. 30 at 564,800 tonnes, above the range of estimates for 200,000 to 350,000 tonnes and 8 percent above the four-week average.

Up to late trading, R.J. O'Brien & Associates bought 500 March contracts, Refco Inc. bought 300 March, FIMAT Futures Inc. bought 400 March, ADM Investor Services sold 300 March and Cargill Inc. sold 200 March and 400 May, floor sources said.

In spreading, ABN AMRO Inc. bought 1,300 January meal contracts and sold 1,300 March at a price differential of 7-1/4 cents.

Soyabean futures volume during Thursday's pit session was estimated by the CBOT at 50,000 contracts, compared with 52,040 Thursday.

CBOT wheat ends up on short covering before report

Soft red winter wheat futures at the Chicago Board of Trade closed higher on Friday on modest fund short covering ahead of government crop reports next week.

CBOT wheat closed 2 to 3-3/4 cents higher with March up 3-1/4 at $2.51-3/4.

CBOT traders were awaiting government reports Wednesday on crop production, wheat acreage, quarterly stocks and supply and demand.

An average of analysts' estimates pegged US wheat stocks as of Dec. 1 at 1.939 billion bushels, above the 1.896 billion bushels on Dec. 1, 1998.

Speculative funds held a sizable short position in wheat futures and likely won't sell aggressively in front of those reports, traders said.

Continuing concerns over the impact of dry conditions in the US Plains winter wheat belt underpinned prices, trader said. Meteorologists expected limited chances for precipitation for the Plains through next week.

Bearishness over large US wheat stocks and sluggish exports continued to cap price upside. The US Department of Agriculture's weekly export sales report early Friday listed net US wheat sales during the week ended Dec. 30 at 162,900 tonnes, a marketing year low and was 73 percent below the the four week average. Funds bought 700 lots. LFG bought 400 March, Refco Inc. bought 200 March, Cargill Inc. bought 400 December and FIMAT Futures bought 1,000 March $2.40 puts.

CBOT wheat futures volume was estimated by the CBOT at 18,000 lots, below the 19,643 lots traded Thursday.

Wheat options volume was estimated at 5,000 lots.

CBOT corn closes higher on short covering

Corn futures at the Chicago Board of Trade closed higher on Friday, rebounding from initial weakness amid a reluctance to push the market lower ahead of crop and supply data next week.

Corn closed 1 to 3-1/4 cents higher with March up 3-1/4 at $2.07.

The market was awaiting government reports Wednesday on crop production, wheat acreage, quarterly stocks and supply and demand. Speculative funds were already heavily short in corn futures and were reluctant sellers in front of those reports, traders said.

An average of analysts' estimates pegged 1999 US corn production at 9.544 billion bushels, above the USDA forecast in November for 9.537 billion bushels.

The average estimate for corn stocks in the US as of Dec. 1 was 8.214 billion bushels, above the 8.052 billion bushels on Dec. 1, 1998.

Prices sank early amid prospects for rain in South America's crop belt and ongoing bearishness over US exports. Friday's forecasts indicated that parts of Argentina -- a major corn producer and exporter -- will receive rain over the weekend and early next week. Weather Services Corp. projected scattered showers and thunderstorms in Argentina's corn and soyabean areas Friday and Saturday, with amounts of one-quarter to 1 inch expected. Tuesday may bring another one-quarter to 1 inch.

Argentina's corn and soyabean belt, along with southern Brazil, has suffered from dry conditions for much of the early growing season.

WSC said Brazil's southern corn area was struggling amid the lack of moisture and Safras e Mercado Friday pegged Brazil's corn production this year at 33.10 million tonnes above the 31.57 million last year but below the previous Safras estimate for this year at 34.45 million tonnes.

Talk circulated earlier this week that Brazil purchased 80,000 to 85,000 tonnes of US corn and was possibly seeking up to 250,000 tonnes. But this was met with limited trade enthusiasm, as it comes within the context of abundant US corn stocks and unimpressive recent export demand overall.

The US Department of Agriculture's weekly export sales report listed net US corn sales during the week ended Dec. 30 at 499,900 tonnes, a marketing year low and 48 percent below the four-week average.

Corn futures volume was estimated by the CBOT at 42,000 lots, below the 49,216 lots traded Thursday.

Corn options volume was estimated at 15,000 lots. -Reuters