COMMODITIES : Grain, Soybeans Dip as Rain Dampens Midwest
Most grain and soybean futures closed sharply lower Wednesday on the Chicago Board of Trade as isolated showers brought limited relief to parched cropland in parts of the Midwest.
But oat futures advanced strongly because the rain missed the northern tier of states, which produce most of the country’s oat crop, analysts said.
Futures prices fell broadly on other commodity markets, partly in reaction to the drop in soybean and grain prices. Pork futures plunged their limits for daily trading; precious metals futures fell sharply; cotton was down the limit, and most energy futures slipped lower. But stock index futures surged.
The Commodity Research Bureau’s index of 21 agricultural and industrial commodities plummeted 3.98 points to 256.33.
Soybean futures, which have climbed to four-year highs on fears of drought damage, posted their steepest one-day decline in two weeks as a band of showers moved eastward from Iowa into Illinois and Missouri.
But nobody was declaring an end to the dry spring or the bull market for grains and soybeans.
“The overall drought-type conditions still appear to be intact,” said Ted Mao, grain specialist with Shearson Lehman Hutton Inc. in New York.
The National Weather Service, in a six-to-10-day forecast issued after the close, predicted a return to normal precipitation in the central United States in the latter part of next week.
Given that forecast, “the market is going to hesitate, I think, and look around and see how things develop,” said David Bartholomew, an assistant vice president of Merrill Lynch Futures Inc. in Chicago.
Wheat settled 5.50 cents to 8.25 cents lower with the contract for delivery in July at $3.6975 a bushel; corn was 1 cent to 6.25 cents lower with July at $2.51 a bushel; oats were 5 cents to 13.50 cents higher with July at $2.35 a bushel, and soybeans were 8 cents to 28.75 cents lower with July at $8.605 a bushel.
Three of the eight hog futures contracts on the Chicago Mercantile Exchange fell their limits for daily trading and all of the frozen pork belly contracts settled limit down.
Chuck Levitt, an analyst with Shearson in Chicago, cited several factors for the drop in hog futures, including the drop in soybean and corn futures.
“The hot, dry weather that was racing the corn and soybeans higher had filtered into the livestock markets,” he said. “When all of a sudden you pull the plug on the grains, you pull the plug on some of these meat contracts as well.”
In addition, Levitt said, traders anticipate an increase in hog marketings due to cooler weather in the Midwest. Wholesale demand for pork has slowed, however, he said.
Cattle futures declined as the market looked ahead to a seasonal increase in supplies, Levitt said.
Live cattle settled 0.35 cent to 1.05 cents lower with June at 72.75 cents a pound; feeder cattle were 0.35 cent to 0.73 cent lower with August at 75.57 cents a pound; hogs were unchanged to the limit 1.50 cents lower with June at 51.42 cents a pound, and frozen pork bellies were 2 cents lower across the board with July at 52.87 cents a pound.
Precious metals futures fell steeply, with platinum leading the way in reaction to news of the resolution of miners strikes in South Africa, analysts said.
The decline in grain prices and the CRB index was seen as having a dampening effect on inflation expectations, which led to further selling of platinum, gold and silver, analysts said.
On the New York Mercantile Exchange, platinum settled $23.50 to $23.60 lower with July at $575.50 an ounce.
On the Commodity Exchange in New York, gold was $3.90 to $4.60 lower with August at $460.70 an ounce; silver was 14.7 cents to 16.2 cents lower with July at $7.13 an ounce.
Forecasts for rain drove the July cotton contract on the New York Cotton Exchange down 2 cents, the daily limit, to 65.80 cents a pound.
Stock index futures soared on the Chicago Mercantile Exchange after Federal Reserve Board Chairman Alan Greenspan said a further depreciation of the dollar’s value in foreign exchange would not help improve the nation’s trade deficit.
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