Funds ring in 2006 with CBOT grain buying binge: By Sam Nelson CHICAGO, Jan 3 (Reuters) - Investment funds rang in the new year on Tuesday at the Chicago Board of Trade with a buying binge in soybean and grain futures, analysts said. Traders said funds bought an estimated 35 million bushels of soybeans, 110 million bushels of corn and 35 million bushels of wheat. They also bought a huge amount of soyoil and a significant volume of soymeal, both of them byproducts of soybeans. CBOT soy rocketed to a four-month high and corn to a three-month peak. Wheat ended above its key 200-day moving average, leaving that market technically strong and poised for further gains. The United States is the world's top producer and exporter of corn and soybeans and the top exporter of wheat. Analysts had been expecting funds to flex their muscle in grains futures as portfolio managers dole out a percentage of the increased global money flow from expanding world economies and from assets stashed in pension and mutual funds. "The fund buying and possibility of more index fund buying is keeping sellers at bay," said Vic Lespinasse, CBOT floor spokesman for A.G. Edwards and Co. Fund managers on Tuesday could not ignore the potential returns from buying inflation-sensitive commodities such as grains and soy as crude oil prices rallied more than $2.00 a barrel, gold jumped to a three-week high, and the dollar, which had climbed through 2005, took a tumble. An additional bullish ingredient in the CBOT market mix stemmed from mounting concern about hot and dry weather in South America's soybean and corn growing areas. "It was a combination of fund buying and Argentina is a dry spot, so the trade is willing to respect that. And as we moved up there was more technical buying and more index fund buying," said Don Roose, president of U.S. Commodities in Des Moines, Iowa. South America recently replaced the United States as the world's dominant soybean producer, and it is a major corn grower. Both crops are growing on the continent, and need warm days and steady rains rather than scorching heat. "The guys are worried about it turning hot and dry in Argentina. The other part is just the fund buying," said Roy Huckabay, analyst with The Linn Group in Chicago. Argentine soybean regions were expected to be dry through Thursday with temperatures heating to the mid-90s to 100s degrees Fahrenheit by midweek, said Meteorlogix forecaster Joel Burgio. Conditions in Brazil have been mostly favorable for crop development. But there were outlooks for a high pressure ridge developing in Rio Grande do Sul which could lead to hotter and drier weather by early next week, Burgio said. Despite the solid gains, analysts cautioned that, as in the stock market, grain markets never travel in a straight line up or down. "I know this: that when you start a pattern or direction, that's the way they want to keep pushing, so I think the funds will keep buying. But it's going to be two steps up and one down," Roose said. END
