Precious Metal Prices Fall; Grains, Soybeans Lower
The Soviet nuclear disaster continued to be a major factor in commodity futures trading Thursday, but this time the price trend was downward, with precious metals, grains and soybeans all closing lower to sharply lower.
Gold and platinum futures prices declined sharply, with silver suffering smaller losses.
“There are expectations that the Soviets will soon be forced to sell some of their gold reserves in order to raise hard currency to finance future imports of grain and livestock,” said Gary Dorsch, senior money-market analyst with G. H. Miller & Co. in Chicago.
May Need to Sell Gold
Dorsch said nuclear contamination from the damaged Chernobyl nuclear power plant will force the Soviets to buy from the United States and Canada, or perhaps from Brazil and Argentina. “In either case,” he said, “there may be a pressing need to sell gold quickly,” since the imports must be financed with hard currency. He said gold and platinum futures markets were hardest hit by the news because the Soviets have substantial reserves in platinum and gold.
On the Commodity Exchange in New York, gold settled $5.10 to $5.40 lower with the contract for delivery in May at $341.10 an ounce, and silver was 2.1 cents to 3 cents lower with May at $5.11 an ounce.
On the New York Mercantile Exchange, platinum settled $14.50 lower with the May contact at $404.80 an ounce.
At the Chicago Board of Trade, wheat and soybean futures prices were sharply lower, with smaller price drops noted in corn and oats.
Market reaction, analysts said, was fueled by speculation that the Soviet nuclear disaster was under control--thus ending two days of frenzied buying as futures prices soared.
“The feeling is that the situation in Russia is gradually improving. Unless the situation deteriorates, the party’s over,” said Victor Lespinasse, an analyst with Dean Witter Reynolds. He said heavy farmer selling overnight also contributed to Thursday’s price drops.
Wheat settled 11 cents to 16 cents lower with the contract for delivery in May at $3.12 a bushel; corn was 2 3/4 cents to 7 cents lower with May at $2.35 1/2 a bushel; oats were 3 cents to 5 1/2 cents lower with May at $1.06 a bushel, and soybeans were 14 3/4 cents to 20 cents lower with May at 5.29 a bushel.
Meanwhile, petroleum futures prices were up on the New York Mercantile Exchange on technical factors. However, traders also were trying to determine the Soviet disaster’s long-range impact on the market.
Peter C. Beutel, assistant director of the energy group of Rudolf Wolff Futures in New York, said the disaster has had no immediate impact on petroleum futures, but traders were speculating that it could force the Soviets to examine all of their nuclear reactors.
Crude Oil Higher
He said that could mean that long term, the Soviets could need to replace nuclear energy with supplies of oil and gas.
Crude oil settled 3 cents to 47 cents higher with the contract for delivery in June at $13.81 a barrel; heating oil was 0.21 cent to 0.68 cent higher with June at 40.56 cents a gallon, and leaded gasoline was 1.02 cents to 1.17 cents higher with June at 50.35 cents a gallon.
On the Chicago Mercantile Exchange, livestock prices were mostly lower on profit taking encouraged by sharp price advances earlier in the week, analysts said.
Live cattle settled 0.70 cent to 1.35 cents lower with the contract for delivery in June at 56.50 cents a pound; feeder cattle were 1.10 cents lower to 0.13 cent higher with May at 55.70 cents a pound; live hogs were 0.10 cent to 0.78 cent lower with June at 45.82 cents a pound, and frozen pork bellies were 1 cent lower to 0.75 cent higher with May at 59.30 cents a pound.
