COMMODITIES : Rain Dampens 5-Day Rise in Soybean Prices
A five-day rally that pushed soybean futures prices to four-year highs ended Thursday as rainy weather forecasts persuaded traders to take profits.
Grain futures also closed lower on the Chicago Board of Trade.
On other markets, pork futures continued to climb; cattle futures were mostly higher; precious metals posted slight gains; energy futures slipped a bit, and stock index futures edged higher.
Soybean futures prices had climbed more than 32 cents a bushel--a gain of nearly 5%--in the past week and set contract highs Monday, Tuesday and Wednesday. But the rally stalled Thursday as rain dampened parts of the Corn Belt, improving the growing conditions for newly planted crops.
Weather forecasters predicted precipitation all the way into next week, prompting traders to offset their long positions and take profits, analysts said.
“After three straight days of new contract highs in the beans and meal, any market needs a pause to catch its breath,” said Victor Lespinasse, a trader for Dean Witter Reynolds Inc.
“It was an orderly correction,” he said. “It wasn’t anything unusual or out of the ordinary.”
Buying interest dried up in the soybean meal market on a lack of orders for Europe, where most businesses were closed for a four-day holiday, said David Bartholomew, an assistant vice president at Merrill Lynch Futures Inc. in Chicago.
“They were providing big support yesterday,” he said of the Europeans. “Essentially what we had Wednesday was a condensing of three days of potential activity into one day.”
Wheat Futures Slip
Analyst Jerry Gidel of G. H. Miller & Co. in Chicago, also noted fairly heavy notices of intent to deliver corn and soybeans against the May contracts, an indication of adequate near-term supplies.
Wheat settled 1 1/2 cents to 4 cents lower, with the contract for delivery in May at $3.01 a bushel; corn was 1 cent to 1 1/2 cents lower with May at $1.96 a bushel; oats were 2 cents to 3 1/2 cents lower with May at $1.55 a bushel; soybeans were 5 cents to 8 cents lower with May at $7.07 a bushel.
Strong cash hog markets helped boost pork futures for a second straight day on the Chicago Mercantile Exchange.
“The cash market is phenomenal,” said Tom O’Hare, an analyst in New York with Smith Barney, Harris Upham & Co. “The daily average price in Omaha two weeks ago was 40.93 cents (a pound). Yesterday, it was 46.23 cents. That’s such a huge increase in a couple of weeks that you’ve got everyone convinced that it’s going to keep going.”
A reduction in the number of hogs coming to market supported notions that the market has entered its seasonal downturn in supplies, he said.
Most cattle futures also advanced on strong cash markets and indications of strong retail demand for beef, O’Hare said.
Live cattle settled 0.20 cent lower to 0.13 cent higher, with June at 73.55 cents a pound; feeder cattle were 0.40 cent to 0.88 cent higher, with May at 80.40 cents a pound; hogs were 0.05 cent lower to 0.45 cent higher, with June at 53.12 cents a pound, and frozen pork bellies were 0.92 cent to 1.65 cents higher, with May at 54.60 cents a pound.
Reaction to Report
Gold and silver futures prices rose in reaction to the government’s upward revision of its March retail sales figure, analysts said.
The Commerce Department revised the March figure to show a 1.7% increase, the biggest advance since August and a much stronger gain than the originally reported 0.8%.
“That showed the economy continues to do well,” which in turn suggests an increase in inflation, said Peter Cardillo, an analyst with Josephthal & Co. in New York.
Gold settled $1.90 to $2.20 higher, with June at $453.30 an ounce; silver was 1.9 cents to 2.8 cents higher, with May at $6.574 an ounce.
Most energy futures prices dipped lower in dull, featureless trading on the New York Mercantile Exchange.
West Texas Intermediate crude oil settled 2 cents lower to 3 cents higher, with June at $17.48 a barrel; heating oil was 0.07 cent to 0.27 cent lower, with June at 47.23 cents a gallon, and unleaded gasoline was unchanged to 0.33 cent lower, with June at 51.92 cents a gallon.
Stock index futures edged higher on the Chicago Mercantile Exchange, where the contract for June delivery of the Standard & Poor’s 500-index settled 0.40 point higher at 253.80.
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