COMMODITIES : Miners Strike Spurs Silver Futures
Silver futures prices soared to 4 1/2-month highs Wednesday after a Peruvian silver mine indicated that it may not be able to meet its delivery schedule because of a miners strike.
On other markets, other precious metals advanced; frozen pork bellies posted limit gains for the second consecutive day while livestock futures were mixed; sugar, bond and stock index futures rose sharply; grains and soybeans were mostly lower, and energy futures were mixed.
The Commodity Research Bureau’s index of 21 commodities rose 1.46 to 249.85 as 10 components gained, seven declined and four ended mixed.
Late Tuesday, one of Peru’s larger silver mines said it could not be held responsible for failure to fulfill its contractual obligations for silver delivery because of a strike.
Primed for Bullish News
The news gave the silver market the push it needed to overcome technical resistance and begin catching up with the surging platinum market, analysts said.
“I think the market was primed for any kind of even mildly bullish fundamental news, and they got it last night,” said Richard Levine, vice president of Elders Futures Inc.’s precious metals and foreign exchange group.
Peru is a major silver-producing country, but the effective shutdown of a single mine hardly qualifies as a major disruption in the pipeline, Levine said.
Rather, he said, Wednesday’s announcement “instigated a long-overdue rally so silver could catch up with platinum,” which has risen in recent weeks to its highest price since October.
On the Commodity Exchange in New York, silver settled 21.3 cents to 21.8 cents higher, with the contract for delivery in July at $6.865 an ounce, and gold was $1.80 to $2.60 higher, with August at $462.40 an ounce.
Platinum Futures Rose
Platinum futures on the New York Mercantile Exchange settled $4.20 to $13 higher, with July at $622.90 an ounce.
Pork belly futures posted strong gains on the Chicago Mercantile Exchange for the second day in a row because of technical factors and expectations of a continuing seasonal decline in hog slaughters, analysts said.
“Basically, the game in the bellies today was the fact they couldn’t press (prices) lower,” said Dale Durchholz, an analyst with AgriVisor Services Inc. in Bloomington, Ill. “Then the fresh bellies took a nice pop, $1 to $2 (per hundredweight), and that really fueled the strength in the belly pits late in the day.”
The contract for March delivery gained 2 cents a pound, the limit allowed for daily trading. Hog and cattle futures finished mixed.
Sugar Futures Rallied
Live cattle settled 0.22 cent lower to 0.08 cent higher, with June at 72.20 cents a pound; feeder cattle were 0.13 cent to 0.07 cent higher, with August at 76.22 cents a pound; hogs were 0.27 cent lower to 0.20 cent higher, with June at 54.50 cents a pound, and frozen pork bellies were 0.78 cent to 2 cents higher, with July at 57.60 cents a pound.
World sugar futures rallied sharply on New York’s Coffee, Sugar & Cocoa Exchange on reports of a large swap-type purchase by the Soviet Union and indications that the Soviets were seeking more, analysts said.
Sugar for July delivery settled 0.49 cent higher at 9.96 cents a pound.
Interest rate futures surged on the Chicago Board of Trade, indicating expectations of smaller yields on U.S. Treasury bonds.
Frederick Sturm, senior economist with Chicago-based Kleinwort Benson Government Securities Inc., said the rally could mean that fears of higher interest rates have peaked.
The contract for June delivery of the 20-year Treasury bond settled 1-23/32 points higher at 87-17/32.
Stock index futures posted sharp gains on the Chicago Mercantile Exchange, where the contract for June delivery of the Standard & Poor’s 500 index settled 3.90 points higher at 266.85.
Grain futures settled lower amid steady profit taking on the Chicago Board of Trade. Soybeans finished mixed.
Soybean Prices Rise
Traders who had bought into Tuesday’s limit gains turned sellers as meteorologists predicted scattered light rain in the Grain Belt over the next few days, analysts said.
The bullish interest in near-month soybean contracts remained strong. The price for July delivery of soybeans surpassed $8 a bushel, the highest price for a nearby soybean contract in more than four years.
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