COMMODITIES : Livestock, Meat and Cotton Fall to Daily Trading Limits
The stock market’s steep drop helped push livestock, meat and cotton futures down their daily limits Monday, but most other commodities reacted to fundamental market factors more than to outside influences.
Stock index futures retreated, soybean and corn futures closed lower and wheat futures advanced. Also, gold gained while the other precious metals declined and energy futures retreated.
Cattle and pork futures plunged early on the Chicago Mercantile Exchange, but analysts differed in their opinions of the role played by the tumbling Dow Jones industrial index, which finished down more than 76 points.
Tom O’Hare, an analyst in New York for Smith Barney, Harris Upham, said the stock market’s performance was the dominant factor in the limit-down day for nearly all cattle and frozen pork belly contracts.
“I think it’s a repeat of what we went through on Oct. 19, but not on as big a scale,” O’Hare said.
On Oct. 19, the Dow fell 508 points and most commodity prices plummeted.
But Tom Morgan, president of Chicago-based Sterling Research, said fundamental factors--including expectations of slackening cattle demand and concern about abundant slaughter-ready hogs--were the day’s main culprits.
Live cattle closed 1.15 cents to the limit 1.50 cents lower, with the contract for delivery in December at 64.85 cents a pound; feeder cattle were 1.10 cents to the limit 1.50 cents lower, with January at 74.75 cents a pound; live hogs were 0.83 cent to the limit 1.50 cents lower, with December at 43.27 cents a pound, and frozen pork bellies were 1.40 cents to the limit 2 cents lower, with February at 54.60 cents a pound.
Most cotton futures settled down the 2-cent-a-pound limit on New York’s Cotton Exchange, with March at 69.62 cents a pound.
“I would say the main factor in the move was the stock market,” said Ernest Simon, cotton specialist in New York with Prudential-Bache Securities.
Analysts were at odds over the reason for Monday’s decline in the Standard & Poor’s 500 stock index futures.
On the Chicago Board of Trade, soybeans led a nearly daylong slide in the bean, corn and oat trading pits on profit taking and selling by speculators.
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