COMMODITIES : Prices Rise for Livestock; Oil Is Also Higher
Livestock futures prices advanced Friday on the Chicago Mercantile Exchange as traders jockeyed their positions before the government released its cattle-on-feed report.
On other markets, oil futures moved higher for the fourth consecutive day, wheat was higher while corn and soybeans declined, and Treasury bonds retreated sharply.
The cattle-on-feed report, released by the Agriculture Department after the close of trading, was not far off from what was expected.
The data probably will be only slightly bearish for the nearby April and June contracts, said Chuck Levitt, an analyst in Chicago with Shearson Lehman Hutton.
The survey of seven leading cattle states indicated that there were 6% more cattle on feed as of March 1 than a year earlier. The number of animals placed on feed during February was 5% lower than 12 months ago, while the marketings was put at 3% above the year-ago figure.
Because the distant contract months are at a substantial discount to the nearby deliveries, traders will be inclined to sell April and June deliveries and buy the back months, Levitt said.
Oil Futures Gain Again
Live cattle settled 0.05 cent lower to 0.22 cent higher, with the contract for delivery in April at 73.77 cents a pound; feeder cattle were 0.10 cent to 0.32 cent higher, with March at 82.12 cents a pound; live hogs were 0.30 cent lower to 0.40 cent higher, with April at 46.20 cents a pound, and frozen pork bellies were 0.25 cent lower to 1.65 cents higher, with March at 55.80 cents a pound.
Oil futures prices advanced for the fourth consecutive day on the New York Mercantile Exchange.
Friday’s advances were a continuation of a rally begun near the close of the previous session after OPEC President Rilwanu Lukman announced that he would have something to report Tuesday about stabilizing prices, said Nauman Barakat, a analyst in New York with Smith Barney, Harris Upham & Co.
“My feeling, though, is that they won’t do anything but continue to talk up the market for a couple of weeks,” he said. “After that, the seasonal demand for gasoline will pick up and so OPEC won’t have to do anything to shore up prices.”
West Texas Intermediate crude oil settled 13 cents to 30 cents higher, with the April contract at $16.58 a barrel; heating oil was 0.52 cent to 0.83 cent higher, with April at 45.05 cents a gallon, and unleaded gasoline was 0.16 cent to 0.39 cent higher, with April at 45.99 cents a gallon.
Treasury bond futures plunged sharply on the Chicago Board of Trade, responding to what analysts said were renewed fears of inflation.
Thursday’s balance of trade figures helped the dollar and the bond market initially, but further examination of the data gave the markets a different view, said Jack Barbanel, an analyst in New York with Gruntal & Co.
Inflation fears came not only from the trade data, he said, but also from the rising CRB Index, which was partially influenced by the $1-a-barrel gain by oil over the last four sessions.
Wheat Shows Strength
Treasury bonds lost 1 9/32 points, with the June contract settling at 91 1/32 points.
Wheat futures prices advanced while soybeans and corn skidded lower on the Chicago Board of Trade.
“Wheat was about the only market that showed any strength,” said Victor Lespinasse, a trader with Dean Witter Reynolds.
Soybeans dropped about a nickel a bushel despite heavy buying again Friday by a large speculator who triggered a strong rally on Thursday.
Friday’s buying by C & D Commodities was accompanied by heavy selling of soybean options, negating any strong response by other traders, said Lespinasse.
He said beans were under pressure from selling by South American interests and by traders unloading contracts before the weekend.
Increased farmer selling overnight weakened the corn market.
A rumor that the Agriculture Department was about to make an announcement of a large offer of subsidized wheat helped that grain, said Lespinasse.
After the close, the department said it offered the Soviet Union 1 million tons of wheat.
Wheat settled 1.50 cents to 3.50 cents higher, with the March contract at $2.99 a bushel; corn was 0.50 cent to 1 cent lower, with March at $1.98 a bushel; oats were unchanged to 3.75 cents higher, with March at $1.96 a bushel, and soybeans were 3.25 cents to 6 cents lower, with March at $6.20 a bushel.
Precious metals futures posted gains on the Commodity Exchange in New York.
Gold was 30 cents higher, with the April contract at $445.20 an ounce.
