COMMODITIES : Grain, Soybeans Mixed on Weather Forecasts
A varied crop of weather forecasts set the grain and soybean futures markets on edge Thursday, and prices teeter-tottered to a mixed close. Wheat and corn advanced, oats were mostly lower and soybeans were mixed.
On other markets, livestock and meat futures moved sharply higher, energy futures advanced, precious metals slipped and stock index futures retreated.
A National Weather Service forecast predicting a return to hot, dry conditions in the drought-stricken Midwest by the middle of next week supported crop futures on the Chicago Board of Trade and helped stem a three-day slide in the corn pit, analysts said.
But traders in the volatile soybean market, who had seen the price for August delivery plunge a total of $1.35 a bushel during the previous three days, were reluctant to buy in the face of forecasts predicting rain in the Farm Belt on Sunday.
Sensitive Market
“You’ve got some conflicting weather forecasts, with some private forecasters calling for a little more than the National Weather Service,” said Joel Karlin, research analyst for Research Department Inc. in Chicago.
Analysts said the soybean market remains extremely sensitive to any weather changes, which will have heavy effects on yields as the crop moves from its pod-forming to its pod-filling stage during the next two or three weeks.
A storm that moved slowly through the Midwest earlier this week helped the soybean crop recover and drove the price for August delivery of soybeans down to $8.565 a bushel by the close of trading Wednesday.
The price fell an additional 14 cents Thursday to $8.425, well below the recent high of nearly $11 reached on June 23 but substantially above $6.90, the price for near-month delivery of soybeans on May 2, just before the drought rally began in earnest.
Analysts said the failure of the August soybean contract to rally above $8.58 a bushel Thursday convinced several large investment firms that it was time to sell. Others joined in, and the August soybean price plunged nearly 40 cents before rebounding.
“There was definitely some disappointment that we couldn’t get much of a rally going, and they sunk her into the hole there for a while,” said Jerry Gidel, grains analyst with G. H. Miller & Co., a Chicago-based trading firm.
Cattle, Pork Higher
Rumors that the Soviet Union had purchased some U.S. corn gave additional support to corn futures, and expectations of new export business gave the wheat market a boost, analysts said.
Wheat settled 4 cents to 6 cents higher, with September at $3.865 a bushel; corn was 5.25 cents to 10.25 higher, with September at $3.17 a bushel; oats were 12 cents lower to 8 cents higher, with September at $2.675 a bushel, and soybeans were 14 cents lower to 25 cents higher, with August at $8.425 a bushel.
Cattle and pork futures soared on the Chicago Mercantile Exchange in reaction to an upswing in wholesale demand for beef and beliefs that recent losses in the pork markets had been overdone, analysts said.
The October live cattle contract and the August and October hog contracts advanced the permitted limit of 1.50 cents a pound, while all frozen pork belly contracts finished up their 2-cents-a-pound limit.
Shipping volume by beef packers on Wednesday hit its highest mid-week level since February, and packers were paying higher prices for cattle, said Tom O’Hare, livestock market analyst with Smith Barney, Harris Upham & Co. in Chicago.
Live cattle settled 0.85 cent to 1.50 cents higher, with August at 65.62 cents a pound; feeder cattle were 0.40 cent to 1.30 cents higher, with August at 76.50 cents a pound; hogs were 0.52 cent to 1.50 cents higher, with August at 44.62 cents a pound, and frozen pork bellies were 2 cents higher across the board with July at 37.75 cents a pound.
Gains for Energy
Energy futures made strong gains on the New York Mercantile Exchange on ideas that a cease-fire between Iran and Iraq would increase the likelihood of an OPEC agreement to limit production, said Peter Beutel, oil analyst with Elders Futures Inc. in New York.
West Texas Intermediate crude oil settled 31 cents to 34 cents higher, with September at $16.39 a barrel; heating oil was 0.55 cent to 0.93 cent higher, with August at 45.53 cents a gallon, and unleaded gasoline was 0.90 cent to 1.66 cents higher, with August at 52.10 cents a gallon.
On the New York Mercantile Exchange, gold settled $2.80 to $3 lower, with August at $442.70 an ounce; silver was 8.5 cents to 9.6 cents lower, with July at $7.737.
Stock index futures retreated on the Chicago Mercantile Exchange, where the contract for September delivery of the Standard & Poor’s 500 index settled 4.40 points lower at 2676.15.
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