COMMODITIES : Grain, Soybean Futures Surge on Weather Jitters

Grain and soybean futures prices rallied Tuesday on the first weather scare of the season even though spring planting has barely begun.

Soybeans advanced as much 7.5 cents a bushel on the Chicago Board of Trade and the grains weren’t far behind as drought fears swept the pits.

On other markets, energy futures retreated, precious metals were mixed, livestock and meat were mostly higher and stock index futures retreated.

“I think we had our first weather scare” on the Chicago Board of Trade, said Steve Freed, grain analyst for Dean Witter Reynolds Inc.

“It’s certainly much too early to be too concerned about weather,” said Ted Mao, grains specialist with Shearson Lehman Hutton Inc. in New York. “But since it looks like the overall acreage base is going to be small this year, the market may be more sensitive to early weather problems.”

At the root of the dry-weather concerns was the Agriculture Department’s report on corn and soybean planting intentions. The report, issued nearly three weeks ago, indicated only slight increases in U.S. corn and soybean acreage.

Analysts have said that because of the lower-than-expected planting intentions, growing conditions even slightly less than ideal could result in tight supplies of corn and beans.

The USDA reported Tuesday that inadequate moisture was causing problems for winter wheat growers in the central and northern Plains. Wheat prices rallied on the news and nervous corn and soybean traders reacted as if those crops were sprouted and withering.

Earlier Gains Erased

“We haven’t even got the crop planted and we’re already killing it,” Freed said.

Wheat settled 2 cents to 3 cents higher, with the contract for delivery in May at $3.1425 a bushel; corn was 1.75 cents to 3 cents higher, with May at $2.055 a bushel; oats were 2.25 cents to 3.75 cents higher, with May at $1.685 a bushel, and soybeans were 6 cents to 7.5 cents higher, with May at $6.72 a bushel.

Profit taking and technically inspired selling erased several days’ worth of gains in energy futures prices on the New York Mercantile Exchange.

“There was not even a fairly good rumor today in the market that I could find,” to cause the sharp selloff, said Bob Baker, an analyst in New York with Prudential-Bache Securities Inc.

Crude oil for May delivery plunged below $18.09 a barrel, the price it settled at a week earlier. May unleaded gasoline relinquished four days’ worth of advances while May heating oil erased two days’ worth of gains.

West Texas Intermediate heating oil settled 39 cents to 49 cents lower, with May at $18.03 a barrel; heating oil was 0.82 cent to 1.01 cents lower, with May at 49.68 cents a gallon, and unleaded gasoline was 0.92 cent to 1.16 cents lower, with May at 52.14 cents a gallon.

Platinum futures also posted fairly steep losses on the New York Mercantile Exchange. Over on the Commodity Exchange, also in New York, gold futures fell slightly while silver gained a bit.

Fundamentally Strong

The $6.10 drop in July platinum to $535.70 an ounce was “only some fine-tuning of what clearly is a very strong market,” said Richard Levine, vice president of Elders Futures Inc.’s precious metals and foreign exchange group.

“Fundamentally, platinum is very strong,” he said.

Gold settled $1 to $1.60 lower, with June at $460.40 an ounce; silver was 1.8 cents to 2.9 cents higher, with May at $6.465 an ounce.

Most cattle and pork futures advanced on the Chicago Mercantile Exchange in response to higher cash prices, analysts said.

Live cattle were unchanged to 0.72 cent higher, with April at 74.82 cents a pound; feeder cattle were 0.12 cent lower to 0.45 cent higher, with April at 78.95 cents a pound; hogs were 0.10 cent lower to 0.38 cent higher, with April at 44.70 cents a pound, and frozen pork bellies were 0.08 cent lower to 0.90 cent higher, with May at 52.10 cents a pound.

Stock index futures fell substantially on the Chicago Mercantile Exchange, where the contract for June delivery of the Standard & Poor’s 500 index settled 1.95 points lower at 257.30.

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