COMMODITIES : Corn Soars the Limit for 3rd Day in Row

Corn futures prices soared the permissible daily limit Thursday on the Chicago Board of Trade for the third consecutive session as fears of drought damage to the corn crop swelled.

Soybean and oat futures also advanced on drought-related buying while wheat futures tumbled in response to a threat of reduced export sales.

On other markets, livestock and meat futures were sharply higher, energy futures advanced, precious metals were lower and stock index futures retreated.

The three corn contracts for 1988 delivery advanced the 15-cents-a-bushel daily limit as dry conditions prevailed in the parched Corn Belt. The near-month contract, for delivery in July, approached $3 a bushel for the first time since September, 1984.

But profit taking limited the gains in soybean prices, and wheat futures fell sharply.

“I think this demonstrates the more serious concern about potential damage to corn than to the other crops,” said Dale Gustafson, an analyst with Drexel Burnham Lambert Inc.

“There was a lot of profit taking” in the soybean and wheat pits, said Victor Lespinasse, a trader with Dean Witter Reynolds Inc. “People are very nervous.”

Experts say much of the U.S. corn crop is in a critical growth stage and requires moisture within a week to avoid severe yield losses. The hardier and more recently planted soybeans can hold on a bit longer.

Corn and soybean futures also were supported by ideas that the low water level in the Mississippi River, the traditional grain-shipping route, could result in increased shipping of grains out of Chicago. Such a switch could reduce supplies of grains available for delivery against futures contracts on the Chicago Board of Trade, Lespinasse said.

Wheat Futures Dive

The selloff in wheat futures was prompted by U.S. Trade Representative Clayton K. Yeutter’s statement early Thursday that export subsidy programs may be reviewed if the drought continues, analysts said.

Traders sold wheat futures heavily despite Agriculture Secretary Richard Lyng’s denial of any plans to reduce subsidized exports.

Wheat settled 8.5 cents to 15 cents lower, with the contract for delivery in July at $3.79 a bushel; corn was 1 cent to 15 cents higher, with July at $2.945 a bushel; oats were 5 cents to 10 cents higher, with July at $2.8925 a bushel, and soybeans were 5 cents lower to 21.5 cents higher, with July at $9.415 a bushel.

Some livestock and meat futures rose the daily limit on the Chicago Mercantile Exchange in a sharp reversal of a week-long downtrend.

In previous sessions, cattle and pork futures prices had fallen on speculation that high feed prices and dried-up pasture land would force livestock producers to reduce their herd sizes, putting more meat onto the market.

Producers have now begun liquidating their herds, giving the futures markets a chance to rebound slightly, said Paul Hare, an analyst with Linnco Futures Inc. in Chicago.

Cattle Prices Mixed

The cattle market faces an Agriculture Department cattle-on-feed report today that is expected to show high numbers of cattle being fattened for slaughter.

Live cattle settled 0.23 cent lower to 1.50 cents higher, with June at 70.70 cents a pound; feeder cattle were 0.23 cent to 1.40 cents higher, with August at 72 cents a pound; hogs were 0.65 cent to 1.50 cents higher, with June at 50.50 cents a pound, and frozen pork bellies were 0.20 cent to 2 cents higher, with July at 45.10 cents a pound.

Oil prices jumped sharply higher in late trading on the New York Mercantile Exchange in response to market rumors that Iranian leader Ayatollah Ruhollah Khomeini had died, observers said.

The rumors could not be confirmed.

West Texas Intermediate crude oil settled 0.13 cent to 0.25 cent higher, with July at $16.66 a barrel; heating oil was 0.37 cent to 0.70 cent higher, with July at 44.12 cents a gallon, and unleaded gasoline was 0.35 cent to 0.96 cent higher, with July at 50.19 cents a gallon.

Gold and silver futures slipped a bit on the Commodity Exchange in New York.

Gold settled $1.20 to $1.90 lower, with August at $450.90 an ounce; silver was 0.5 cents to 1.5 cents lower, with July at $7.14 an ounce.

Stock index futures fell on the Chicago Mercantile Exchange, where the contract for June delivery of the Standard & Poor’s 500 index settled 4.60 points lower at 270.20.

Tables, Page 6