COMMODITIES : Wheat Drops as USDA Auctions Debut

Wheat futures prices slipped substantially Tuesday on the Chicago Board of Trade as the Agriculture Department launched a series of auctions aimed at reducing government stockpiles of surplus wheat.

On other markets, other grains and soybeans ended mostly lower, energy futures retreated, most livestock and meat futures advanced, precious metals were mixed and stock index futures were higher.

The USDA’s weekly auctions of surplus wheat, begun in November, have gradually lost steam. So on Tuesday, the agency launched a new series of sales to be held three times a week.

The agency has set targets of 10 million bushels for each of the new auctions during the first two weeks, which creates the potential for adding 30 million bushels a week to the open market.

The old weekly auctions usually had targets of 25 million bushels. Sales in recent weeks had fallen well short of that goal, however, with less than 16 million bushels sold last Friday.

Traders fear that the new auctions, which divide the sales by regions of the country, will be more successful and depress cash prices by adding to available supplies of wheat, analysts said.

“The possibility of selling 10 million bushels the first time out is probably going to be a little tough,” said Jerry Gidel of Chicago-based G. H. Miller & Co. “But it’s the fact that they’re coming right back tomorrow, then on Friday again, that has the market a little on edge.”

However, analyst Jim Quinton of Agri-Visor Services Inc. in Bloomington, Ill., said the auctions probably would have little long-term effect on futures prices.

Results Likely Today

Quinton attributed Tuesday’s wheat losses of up to 5 cents a bushel to profit taking by speculators.

Results from Tuesday’s auction will likely be released today.

Wheat settled 4.50 cents to 5 cents lower, with the contract for delivery in March at $3.11 a bushel; corn was unchanged to 0.75 cent lower, with March at $2.0375 a bushel; oats were unchanged to 0.50 cent higher, with March at $1.945 a bushel, and soybeans were 1 cent lower to 1.50 cents higher, with March at $6.35 a bushel.

Energy futures prices, particularly for refined products, fell sharply on the New York Mercantile Exchange, where analysts said bulls and bears have been waging a technical tug of war.

“This market seems to be moving briskly within a range, which is what it probably will continue to do before it decides which way it wants to go,” said Peter Beutel, an analyst in New York for Elders Futures Inc.

West Texas Intermediate crude oil traded as much as 0.46 cent lower, but settled 0.11 cent to 0.29 cent lower, with April at $15.72 a barrel; heating oil was 0.82 cent to 1.15 cents lower, with April at 43.47 cents a gallon, and unleaded gasoline was 0.93 cent to 1.10 cents lower, with April at 45.29 cents a gallon.

Gold moved slightly higher while silver futures retreated a bit on New York’s Commodity Exchange. Gold for April delivery sank to $425 an ounce during the session, but rebounded to settle at $432.40.

Stock index futures inched higher on the Chicago Mercantile Exchange, where the contract for March delivery of the Standard & Poor’s 500 index settled 0.35 point higher at 267.65. The underlying spot index was down 0.59 at 267.23.

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