COMMODITIES : Prices End Mixed as Showers Slow Rally

The drought-driven rally in most grain and soybean futures markets stalled Friday as scattered showers forced skittish traders to pause for a look at reality, analysts said.

Prices yo-yoed on the Chicago Board of Trade but finished mixed with only oat futures continuing the sharply higher trend established earlier in the week.

On other exchanges, precious metals futures fell sharply, livestock and meat futures were mixed, energy futures slipped and stock index futures retreated.

“This thing has more lives than a cat. It kept coming back and coming back,” Victor Lespinasse, a trader with Dean Witter Reynolds Inc., said of the grain market’s erratic performance.

Reports of scattered showers in the Farm Belt and expectations for more rain dampened the buying enthusiasm that has driven grain and soybean futures prices up sharply this month. But the market’s resilience suggested prices could skyrocket again next week if the weekend is dry and meteorologists continue to predict drought conditions, analysts said.

Soybeans opened lower, climbed higher, fell sharply, then settled mixed for the session but substantially below the 15-year high of $10.995 a bushel reached Thursday. Corn futures followed a similar path.

Analysts said the July corn contract was under pressure because up to 1.3 billion bushels of corn held in a government reserve program could be released on to the market next week.

The corn is stored under a government program that provides cash loans to farmers when prices are low. In return for the loan, the farmer agrees to keep the corn in storage.

When the price recovers to a predetermined trigger level, the farmer can sell the corn for cash, repay the loan and keep any difference as profit.

A USDA official said he expected the trigger level for the 1984 and 1985 loan programs to be reached Monday.

Wheat Higher

Concerns that the release of so much corn could drive cash prices lower was one factor prompting speculators to close out positions in the futures market and take profits, analysts said.

Wheat finished slightly higher and 1988 oat futures, which reached record highs earlier this week, soared their daily limit for the fifth consecutive session on reports of irreversible crop damage.

Wheat settled 2.75 cents lower to 6 cents higher, with the contract for delivery in July at $3.805 a bushel; corn was 5.5 cents lower to 2.5 cents higher, with July at $3.425 a bushel; oats were 6 cents lower to 15 cents higher, with July at $3.63 a bushel, and soybeans were 10 cents lower to 10 cents higher, with July at $10.295 a bushel.

Precious metals futures fell sharply on New York’s Commodity Exchange in response to the dollar’s strong gains against other currencies.

A stronger dollar is perceived as reducing the potential for inflation, analysts said. A variety of government reports issued this week indicating only modest growth in the economy also helped cool inflation fears.

Precious metals, which are perceived as an investment hedge against inflation, tend to rise and fall with inflationary expectations.

“The markets are feeling that maybe the economy is not overheating and that’s helped to reduce concerns about inflation,” said Craig Sloane, a metals analyst with Smith Barney, Harris Upham & Co. in New York.

Gold settled $4.70 to $6.60 lower, with August at $446 an ounce; silver was 17.5 cents to 18.1 cents lower, with July at $6.81 an ounce. Copper was 1.55 cents to 4.60 cents lower, with July at $1.045 a pound.

Cattle futures advanced, hogs were mixed and frozen pork bellies continued their steep slide on the Chicago Mercantile Exchange.

The steadying grain futures boosted cattle futures on ideas that feed prices may not rise high enough to force as much herd-thinning as had been feared, said Thomas Morgan, president of Sterling Research Corp. in Arlington Heights, Ill.

Profit Taking in Energy

The grain markets also supported hog futures but not enough to overcome the bearish implications of Wednesday’s Agriculture Department report showing large supplies of pork and poultry in cold storage, Morgan said.

Live cattle were 0.10 cent to 0.65 cent higher, with August at 62.77 cents a pound; feeder cattle were 0.45 cent to 1.08 cents higher, with August at 70.85 cents a pound; hogs were 0.95 cent lower to 0.52 cent higher, with July at 44.92 cents a pound, and frozen pork bellies, falling the 2-cent limit for the third straight day, were 1.8 cents to 2 cents lower, with July at 38.20 cents a pound.

Energy futures prices skidded as profit taking ended a three-day rally in the gasoline pit at the New York Mercantile Exchange.

West Texas Intermediate crude oil settled 27 cents to 36 cents lower, with August at $16.01 a barrel; heating oil was 0.77 cent to 0.97 cent lower, with July at 43.14 cents a gallon, and unleaded gasoline was 0.05 cent to 0.36 cent lower, with July at 50.91 cents a gallon.

Stock index futures posted moderate losses on the Chicago Mercantile Exchange, where the contract for September delivery of the Standard & Poor’s 500 index settled 1.95 points lower at 275.20.

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