COMMODITIES : Hog Futures Plunge Limit in Late Selloff : Fears of Bearish Report Later Prove Unfounded

The contract for June delivery of live hogs plunged the 150-point limit for daily trading Thursday on the Chicago Mercantile Exchange in a late selloff ahead of an important government report, analysts said.

On other markets, in mostly thin trading ahead of the three-day weekend, grains and soybeans were mixed; precious metals retreated; energy futures were mixed, and stock index futures advanced.

Speculation that the Agriculture Department’s quarterly 10-state hogs and pigs report would prove bearish for the pork complex sparked the late plunge in hog prices, analysts said.

But when the report came out after the close, experts called it neutral to bullish.

The report showed the hog and pig count in states that account for 80% of U.S. production at about 40.5 million head as of March 1, a 6% increase over March 1, 1987.

Small Increases

The average of analysts’ pre-report estimates was a 5.9% increase. The market had already adjusted to reflect the estimates, so many analysts termed the report neutral for pork futures prices.

But a breakdown of the report showed relatively small increases of 3% for hogs weighing 60 to 119 pounds and 4% for hogs weighing 120 to 179 pounds.

Those animals will come to market in April and May, resulting in a smaller increase in slaughters than the market experienced in March, said Tom O’Hare, an analyst in New York with Smith Barney, Harris Upham & Co.

The likely near-term outcome is slightly higher pork futures prices, especially on contracts for delivery in the summer and fall, O’Hare said.

“Initially, it may help the back months and the fronts may sit still,” he said. “But as people realize that kills are not picking up, I think it’s going to help everything.”

Live cattle settled 0.10 cent to 0.58 cent lower, with the April contract at 74.90 cents a pound; feeder cattle were 0.45 cent lower to 0.05 cent higher, with March at 82.77 cents a pound; hogs were 1.50 cents lower to 0.17 cent higher, with April at 45.52 cents a pound, and frozen pork bellies were 0.42 cent lower to 0.50 cent higher, with May at 56.12 cents a pound.

Grain Reports Mixed

Grain and soybean futures finished mixed on the Chicago Board of Trade ahead of two eagerly awaited government reports.

The Agriculture Department’s annual report on spring planting intentions and its quarterly report on grain stocks, both issued after the close, were construed as very bullish for soybeans and slightly bearish for corn and wheat.

The plantings report, based on farmer surveys conducted in March, predicted about a 1% increase in soybean acreage to 57.9 million acres. The number was well below the average pre-report estimate of 59.1 million acres.

Soybean stocks, estimated at nearly 1.15 billion bushels as of March 1, were slightly below the average pre-report estimate.

Because the markets will be closed today, they cannot react to the reports until Monday. Analysts said they expected soybean prices to climb sharply to encourage more farmers to plant soybeans.

During the next two weeks, “I think we may go 30 to 60 cents higher from (current) levels,” said Cathy Leow, assistant vice president of Thomson-McKinnon Securities Inc.