COMMODITIES : Soybean Futures Prices Drop
Soybean futures prices dipped sharply Tuesday on the Chicago Board of Trade as market participants took profits amid signs of weakening demand, analysts said.
On other markets, grain futures settled lower; cotton retreated; livestock and meat futures were mixed; precious metals retreated and stock index futures were lower.
Soybean futures retreated along with soybean meal as warmer temperatures prevailed in the major livestock-producing states, said Jerry Gidel, an analyst in Chicago with G. H. Miller & Co.
Livestock producers use soybean meal to supplement grain feed, and demand rises during cold spells, Gidel said.
“In real cold weather, livestock eat to keep warm and end up having to eat more,” he said.
Analyst Steve Freed of Dean Witter Reynolds Inc., also noted profit taking in the bean complex.
Technical selling accelerated the decline when the contract for January delivery of soybeans fell below $6.15 a bushel, Gidel said. The contract settled at $6.0525.
The January soybean meal contract settled $7.40 lower at $183.20 a ton.
Corn prices fell back on indications that the Soviet Union was hesitant about buying more U.S. corn at current prices, Gidel said.
He said wheat was pressured by the Agriculture Department’s announcement Monday that it had sold 26 million bushels of surplus wheat in Friday’s weekly auction. That was the largest amount of wheat sold since the auctions began in early November.
The USDA said Monday the U.S. winter wheat crop was in mostly good to fair condition.
Wheat settled 2 cents to 2.75 cents lower, with March at $3.25 a bushel; corn was 1.50 cents to 2.25 cents lower, with March at $1.935 a bushel; oats were unchanged to 0.75 cent lower, with March at $1.885 a bushel; soybeans were 3 cents to 10.75 cents lower, with January at $6.0525 a bushel.
Cotton futures suffered a steep selloff on New York’s Cotton Exchange in reaction to Monday’s monthly USDA crop report revising the new crop yield to a record 703 pounds an acre, up from 695 pounds an acre in the December report.
Analyst Ernest Simon of Prudential-Bache Securities Inc. in New York said the market was surprised by the USDA’s new production estimate of 14.7 million bales, up from about 14.3 million last month.
“A crop report of that size was completely unexpected,” Simon said. “The largest estimate I had heard was 14.5 million.”
The nearby March contract traded as low as 63.30 cents a pound but settled at 64.13 cents, 1.17 cents below Monday’s settlement price.
Livestock and meat futures ended mixed to lower on the Chicago Mercantile Exchange on lower cash values for cattle and hogs and expectations for weakening short-term demand, said Charlie Richardson, an analyst in Denver with Lind-Waldock Inc.
Live cattle were 0.37 cent lower to 0.10 cent higher, with February at 66.42 cents a pound; feeder cattle were 0.32 cent lower to 0.52 cent higher, with January at 79.62 cents a pound; live hogs were 0.10 cent lower to 0.25 cent higher, with February at 45.77 cents a pound; frozen pork bellies were 0.05 cent to 0.80 cent lower, with February at 54.92 cents a pound.
Precious metals futures drifted lower, with many traders taking to the sidelines to await Friday’s release of U.S. trade figures for November.
Most analysts expect the trade deficit to narrow, said John Norris, chief metals trader for Citibank in New York.
Gold settled $1.20 to $1.50 lower with January at $480.70 an ounce; silver was 12.5 cents to 14.5 cents lower with January at $6.74 an ounce.
Stock index futures settled lower after a volatile session on the Chicago Mercantile Exchange, said Bob Ray, an analyst in Chicago with Dean Witter Reynolds.
The losses were linked to weakness in yen futures, he said.
The contract for March delivery of the Standard & Poor’s 500 index settled 1.35 points lower at 246.35. The underlying spot index closed at 245.44 points, down 2.05.
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