COMMODITIES : Grain, Soybeans Surge to Daily Limits
The hot, dry weather scorching the Midwest sent grain and soybean futures prices surging Monday by the maximum amount permitted for a single day on the Chicago Board of Trade.
Soybeans advanced by the daily limit of 30 cents a bushel for the second consecutive session, bringing the July contract to $8.79, the highest level in four years.
All six major agricultural futures were up the limit for the first time in a decade or more, the exchange said.
On other markets, live cattle and pork futures moved sharply higher; cotton was up the limit; coffee advanced, and energy futures declined.
With the continuing lack of moisture in the Midwest, soybeans have gained $1.11 a bushel in the past week.
“It’s a ferocious weather market,” said trader Victor Lespinasse with Dean Witter Reynolds Inc.
And not much improvement is in sight. After the close of trading Monday, the National Weather Service released its 6- to 10-day forecast, predicting continued warm and dry conditions.
Lespinasse said tens of thousands of buy orders languished at the Board of Trade, with only few sellers surfacing. The expectations were for sharp price advances again on Tuesday.
Because of two consecutive sessions with limit gains, daily trading limits are expanded on Tuesday to 45 cents a bushel for beans, 15 cents a bushel for corn and oats and $15 a ton for meal.
Wheat settled 20 cents higher with the contract for delivery in July at $3.8275 a bushel; corn was 10 cents higher with July at $2.445 a bushel; oats were 10 cents higher with July at $2.065 a bushel, and soybeans were 30 cents higher with July at $8.79 cents a bushel.
The sharp rise in grains and beans was felt in other markets, as well. Live cattle and pork futures posted sharp gains at the Chicago Mercantile Exchange, while most cotton contracts were up the limit at the Cotton Exchange in New York.
“The limit up grain prices had a lot to do with supporting the distant deliveries (of cattle),” said Philip Stanley, an analyst with Thomson McKinnon Securities Inc.
He said the hot weather gave a direct boost to the nearby contracts of cattle and hogs because of a reluctance to move the animals to market in the heat.
“And there may be some liquidation of the (cattle) breeding herd and of sows,” he said. Higher grain prices mean more expensive feed and lower profits.
Live cattle were 0.57 cent to the limit 1.50 cents higher with the June contract at 73.22 cents a pound; feeder cattle were 0.80 cent lower to 0.15 cent higher with August at 75.17 cents a pound; live hogs were 0.50 cent to the limit 1.50 cents higher with June at 52.95 cents a pound, and frozen pork bellies were 0.57 cent to 1.85 cents higher with July at 56.12 cents a pound.
Cotton futures prices rose the limit, continuing a trend of that commodity following soybean prices, said Ernest Simon, cotton specialist with Prudential-Bache Securities Inc.
“It doesn’t make any sense since we have absolutely no problem with cotton. There’s no (weather) stress; it’s too early,” he said.
Cotton settled 1.96 to the limit 2 cents higher with July at 68.34 cents a pound.
Tables, Page 12
