COMMODITIES : Oat Futures Up the Limit; Drought Cited
Oat prices rose the maximum allowed Friday, but most other grain future contracts advanced only slightly and soybeans fell in a volatile session on the Chicago Board of Trade.
On other markets, energy prices fell sharply, precious metals decreased, livestock and meat futures were mixed and stock index futures fell.
The Commodity Research Bureau’s index of 21 agricultural and industrial commodities slipped 0.55 point to 257.65.
At the Chicago Board of Trade, new forecasts for rain in the western Grain Belt during the weekend and early next week prompted heavy profit taking in most of the agricultural futures pits late in the session, analysts said.
“But if it’s hot and dry over the weekend, we’ll probably be limit-up on Monday,” said Joel Karlin, an analyst with Research Department Inc. in Chicago, referring to the limits on daily changes in contract prices.
Trading in the soybean pit became hectic in the final hour, which saw the soybean contract for July delivery plunge from a contract high of $9.14 a bushel to $8.56 before rebounding to finish at $8.84.
Oat futures bucked the trend for grains, however, reflecting the damage done to the U.S. oat crop by drought conditions in the upper Midwest. The contracts for July and September delivery rose the daily limit of 10 cents a bushel.
Hot, Dry Forecast
“We stayed locked limit-up all day,” said Jay Homan, an independent oat trader. “Some opening orders never even got filled.”
The National Weather Service’s 6-to-10-day outlook called for above-normal temperatures and normal to below-normal rainfall for the Midwest during the latter half of next week.
Wheat settled 7 cents lower to 2.75 cents higher, with the contract for delivery in July at $3.7375 a bushel; corn was 1 cent to 4 cents higher, with July at $2.5775 a bushel; oats were unchanged to 10 cents higher, with July at $2.60 a bushel, and soybeans were 8 cents lower to 5.50 cents higher, with July at $8.84 a bushel.
Crude oil futures fell below $17 a barrel on the New York Mercantile Exchange, bringing the decline for the week to about 75 cents.
Technical factors and skepticism about the midyear meeting of the Organization of Petroleum Exporting Countries kept the energy markets under pressure, analysts said.
News reports ahead of the OPEC meeting, which begins today in Vienna, have highlighted the rift between members who want to limit oil production and those who think quotas should be raised, said Michael Rothman, senior energy analyst with Merrill Lynch Capital Markets Inc. in New York.
The disagreement is not new but “when you’ve got a market that’s hungry for information, it’s going to react to what it’s been given,” he said.
Precious Metals Sink
West Texas Intermediate crude oil settled 31 cents to 35 cents lower, with the July contract at $16.73 a barrel; heating oil was 0.06 cent to 0.67 cent lower, with July at 44.25 cents a gallon, and unleaded gasoline was 0.48 cent to 0.68 cent lower, with July at 49.22 cents a gallon.
Precious metals futures posted steep losses on New York’s Commodity Exchange on technical factors and in response to the late drop in soybean futures, analysts said.
Some traders who had been expecting a strong inflation signal were disappointed by the government’s report of a 0.5% rise in wholesale prices last month, said Peter Cardillo, commodity trading adviser for Josephthal & Co. in New York.
“There were those that were looking for a higher number,” he said.
Gold settled $8 to $9.20 lower, with the August contract at $453.30 an ounce; silver was 16.5 cents to 16.6 cents lower, with July at $7.015 an ounce.
On the Chicago Mercantile Exchange, live cattle futures retreated, while feeder cattle were mixed, reflecting expectations that cash cattle prices have passed their seasonal peak, said Charlie Richardson, an analyst in Denver with Lind-Waldock & Co.
Hog futures were mixed despite low cash prices, with support stemming from technical buying after two days of losses at the maximum allowed, he said.
Frozen pork bellies declined sharply as the market continued to seek a level that will stimulate demand for the near-record number of bellies in cold storage, analysts said.
Live cattle settled 0.05 cent to 0.57 cent lower, with the June contract at 72.32 cents a pound; feeder cattle were 0.32 cent lower to 0.25 cent higher, with August at 75.25 cents a pound; hogs were 0.20 cent lower to 0.78 cent higher, with June at 51.15 cents a pound, and frozen pork bellies were 0.05 cent to 1.15 cents lower, with July at 50.07 cents a pound.
Stock index futures finished slightly lower on the Chicago Mercantile Exchange, with the contract for June delivery of the Standard & Poor’s 500 index settling 0.35 point lower at 271.10.
