COMMODITIES : Silver Futures Soar to Seven-Month High
Prices of silver futures skyrocketed to seven-month highs in their largest single-day gain since last September as news of a Peruvian mine strike and continuing inflation fears unleashed a storm of speculative buying.
On other markets, other precious metals also advanced sharply; copper prices leaped; grain and soybeans futures posted strong gains; livestock and meat futures were mixed; energy futures were mixed, and stock index futures retreated.
The Commodity Research Bureau’s index of 21 commodities surged 3.25 to 253.08, its highest level since Dec. 4, 1984. Fifteen components gained; four posted losses, and two were mixed.
Little Effect on Silver Supplies
The crippling strike at the Uchucchacua mine owned by Buenaventura, Peru’s largest silver producer, will probably not have much effect on world silver supplies, analysts said.
But the silver market has lagged behind platinum and gold in recent months, and news of the strike gave speculators an excuse to buy heavily into silver, said George Anagnos, metals analysts for Thomson McKinnon Securities Inc. in New York.
“To some extent, there was some pent-up buying mechanism built into the market structure,” Anagnos said.
In addition, the broad rise in commodity prices during the past several months has fanned inflationary fears, prompting many U.S. investors to turn to precious metals for the first time since the financial markets collapsed in October, analysts said. Precious metals tend to hold their value during times of rising prices.
Gold Futures Jump
“We’re starting to see more speculative demand here in the United States based on the sharp increase in the CRB index and the strength in the grains, and that obviously translates into fear of inflation,” said Jacques Luben, executive director of investments for the New York-based Platinum Guild International.
On the Commodity Exchange in New York, gold settled $9.10 to $10 higher, with the contract for delivery in August at $471.50 an ounce; silver was 44 cents to 47.6 cents higher, with July at $7.305 an ounce.
Also on the Comex, reports of a strike at Southern Peru Copper Co.’s Toquepala mine contributed to fears of tight copper supplies and helped drive futures prices sharply higher, Anagnos said.
Copper settled 1.80 cents to 9.70 cents higher, with June at $1.0825 a pound.
Soybean futures prices surged on the Chicago Board of Trade and grain futures posted moderate gains on forecasts for continued warm, dry weather in the Midwest.
The soybean market, already more sensitive than grains to weather factors because of tight-supply concerns, got an additional boost from indications that the Soviet Union recently purchased more than 1 million metric tons of soybean meal from South American processors and was looking for more, analysts said.
“I think the bean rally was due to the rally in meal more than anything else,” said Joel Karlin, an analyst with Research Department Inc. in Chicago.
The soybean meal contract for delivery in July settled $7 higher at $252.70 a ton.
Cattle Futures Gain
Wheat settled 0.50 cent to 2.75 cents higher, with July at $3.5050 a bushel; corn was 1 cent lower to 3.50 cents higher, with July at $2.2475 a bushel; oats were 7.25 cents to 8.25 cents higher, with July at $1.8650 a bushel; soybeans were 0.50 cent lower to 18 cents higher, with July at $8.19 a bushel.
Cattle futures advanced on the Chicago Mercantile Exchange on speculation that cash prices for dressed beef were ready to rebound after a recent decline, analysts said.
Pork futures retreated in anticipation of an increase in hog marketings next week as cooler weather moves into the major hog-producing states, said Tom Morgan, president of Sterling Research Corp. of Arlington Heights, Ill.
Hogs sometimes die if they are transported in hot weather, he said.
“Hogs don’t sweat well,” Morgan said. “When the weather gets hot, they tend not to market hogs as aggressively.”
Live cattle settled 0.17 cent to 0.37 cent higher, with June at 72.50 cents a pound; feeder cattle were unchanged to 0.38 cent higher, with August at 76.60 cents a pound; hogs were 0.05 cent to 0.65 cent lower, with June at 53.85 cents a pound, and frozen pork bellies were 0.95 cent lower to 1.55 cents higher, with July at 57.05 cents a pound.
Oil Prices Mixed
Oil prices finished mixed in a quiet session on the New York Mercantile Exchange.
West Texas Intermediate crude oil settled 7 cents to 13 cents higher, with July at $17.65 a barrel; heating oil was 0.38 cent lower to 0.30 cent higher, with July at 47.38 cents a gallon, and unleaded gasoline was 0.23 cent lower to 0.10 cent higher, with July at 51.51 cents a gallon.
Stock index futures retreated slightly on the Chicago Mercantile Exchange, where the contract for June delivery of the Standard & Poor’s 500 index settled 0.50 point lower at 266.35.
