FINANCIAL MARKETS : Commodities : Futures’ Rally Tied to Dollar’s Gains

Treasury bond futures advanced strongly Tuesday on the Chicago Board of Trade, reflecting a surge of confidence in the dollar and hope for an improving trade balance.

On other markets, grain and soybean futures were higher; livestock and meats were mostly higher; energy futures were mostly a little higher, and precious metals futures declined.

Financial futures got their first signal from the overnight currency market, with very strong buying of the dollar in Europe, said Jack Barbanel, an analyst in New York with Gruntal & Co.

When markets opened in this country, the dollar made impressive gains, particularly against European currencies, he said.

Treasury bonds settled 28/32 to 1 8/32 points higher with the contract for delivery in December at 80 16/32 points.

Barbanel said most of the support for the dollar came from “people expecting a pretty good balance of trade number” when the August data is released Wednesday.

“This is somewhat puzzling since the consensus is for a $14.5-billion deficit, which is certainly an improvement over $16 billion (the previous month), but about the average for all of 1987,” Barbanel said.

“Apparently people are happy just to get some kind of improvement.”

Futures prices for all the major European currencies were lower at the Chicago Mercantile Exchange, with the British pound down 60 points at $1.6415 for the December contract.

Grain and soybean futures prices rallied to close higher on the Chicago Board of Trade.

A lack of farmer selling amid the corn and soybean harvest gave those commodities a boost, said Joel Karlin, an analyst with Research Department Inc.

Wheat futures were helped by improved export prospects, with the Soviet Union and India among the likely buyers, said Karlin.

There was a report that a trade team from India will come to this country in early November to discuss the possibility of buying U.S. wheat.

Wheat was 1 cent to 5 cents higher with the December contract at $3.10 a bushel; corn was 2.5 cents to 6.5 cents higher with December at $1.8475 a bushel; oats were unchanged to 1.75 cents higher with December at $1.86 a bushel, and soybeans were 5 cents to 7.5 cents higher with November at $5.405 a bushel.

Livestock and meat futures were mostly higher on the Chicago Mercantile Exchange.

Cattle futures continued a rally that has moved them 3.5 cents a pound higher in the last week, noted William J. Arndt, an analyst in Chicago with Dean Witter Reynolds.

cent to 0.28 cent higher with the December contract at 68.90 cents a pound; feeder cattle were 0.18 cent lower to 0.40 cent higher with October at 78.27 cents a pound; live hogs were 0.20 cent lower to 0.30 cent higher with October at 50.47 cents a pound, and frozen pork bellies were unchanged to 0.45 cent higher with February at 59.62 cents a pound.

Energy futures were mostly a little higher in subdued trading on the New York Mercantile Exchange.

“The perception is that the supply and demand of oil are very, very evenly matched,” said Peter Beutel, an analyst in New York with Elders Futures Inc.

Also, he said, there’s reason to believe that the Reagan Administration and Saudi Arabia, with its Arab allies, are committed to keeping the price of crude oil in the $18- to $20-a-barrel range.

West Texas Intermediate crude oil settled 5 cents to 8 cents higher with the November contract at $19.70 a barrel; heating oil was 0.10 cent lower to 0.16 cent higher with November at 55.70 cents a gallon, and unleaded gasoline was 0.21 cent to 0.30 cent higher with November at 51.75 cents a gallon.

At the Commodity Exchange in New York, gold was $2.60 to $3 lower with the October contract at $459.10 an ounce, and silver was 8.8 cents to 10.7 cents lower with October at $7.705 an ounce.

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