COMMODITIES : Midwest Rain Causes Soybean Prices to Wilt

Soybean futures prices settled at a two-month low Monday after falling for the sixth straight day on perceptions that a wetter weather pattern was bringing a gradual recovery of drought-stressed Midwestern crops, analysts said.

Grain futures also finished sharply lower on the Chicago Board of Trade.

On other markets, precious metals futures plummeted; cattle were up while pork futures were down; energy futures fell, and stock index futures advanced.

As rain puddles dried outside the Chicago Board of Trade, most contracts for future deliveries of corn and soybeans plunged their respective daily limits of 10 cents and 30 cents a bushel.

The August soybean contract has skidded $1.91 a bushel over six consecutive losing sessions and finished Monday at $8.005.

Light, scattered showers fell during the weekend and Monday in the Midwest, continuing a pattern that developed in mid-July to replace the unusually warm and dry conditions that had dominated the region for three months.

“There is certainly a lot of varying opinion over how much benefit it may have done for the crop, but traders clearly are responding to the fact that moisture exists, and that’s a significant departure from what we saw in April, May and June,” said Ted Mao, grain specialist with Shearson Lehman Hutton Inc. in New York.

But Richard Loewy, senior grain and oil seed analyst with Prudential-Bache Securities Inc. in New York, disagreed with weather-related explanations of the markets’ behavior.

Anticipated Forecast

Loewy cited last week’s bullish long-range forecasts for a return to hot, dry conditions in the Farm Belt and said: “The market is just not concerned about weather anymore.”

He said Monday’s selloff probably was triggered by reports of large build-ups of peanut oil and Malaysian palm oil, which compete in the market with soybean oil.

Traders also were said to have sold on rumors that the National Weather Service’s new 6-to-10-day outlook would predict continued wet weather in the Midwest.

That forecast, which was issued after the close, did indeed predict above-normal rainfall in most of the Midwest during the first five days of next week.

Wheat settled 6 cents to 13 cents lower, with the contract for delivery in September at $3.715 a bushel; corn was 7 cents to 10 cents lower, with September at $3.025 a bushel; oats were 1.5 cents to 7 cents lower, with September at $2.54 a bushel, and soybeans were 22.5 cents to 30 cents lower, with August at $8.005 a bushel.

The drop in crop futures helped trigger a collapse in precious metals futures prices on New York’s Commodity Exchange, analysts said. Gold futures settled at their lowest levels since April 8, 1987.

Investment demand for precious metals tends to rise and fall with expectations for inflation, so analysts said the lower grain futures, lower oil futures and Monday’s stronger dollar all contributed to the sharp decline in gold and silver futures.

“The fact that it was a fairly thin market (with relatively few people trading) also contributed to it,” said John Norris, chief precious metals trader for Citibank in New York.

Cattle Futures Rise

Gold settled $16.30 to $18.40 lower, with August at $426.60 an ounce; silver was 57 cents to 62.8 cents lower, with July at $7.036 an ounce.

On the Chicago Mercantile Exchange, most cattle futures ignored Friday’s bearish quarterly cattle-on-feed report and settled higher in line with higher cash markets, said Thomas Morgan, president of Sterling Research Corp. of Arlington Heights, Ill.

Pork futures fell sharply in reaction to another Agriculture Department report showing near-record numbers of pork bellies in cold storage, Morgan said.

Live cattle were 0.12 cent to 0.60 cent higher, with August at 66.35 cents a pound; feeder cattle were 0.10 cent lower to 0.53 cent higher, with August at 77.75 cents a pound; hogs were 0.45 cent to 1.30 cents lower, with August at 45.52 cents a pound, and frozen pork bellies were 0.85 cent to the limit 2 cents lower, with August at 36.80 cents a pound.

On the New York Mercantile Exchange, West Texas Intermediate crude oil settled 33 cents to 40 cents lower, with September at $16.05 a barrel; heating oil was 0.78 cent to 0.92 cent lower, with August at 44.17 cents a gallon, and unleaded gasoline was 0.85 cent to 1.04 cents lower, with August at 51.22 cents a gallon.

Stock index futures advanced on the Chicago Mercantile Exchange, with the contract for September delivery of the Standard & Poor’s 500 index up 1.18 points at 264.68.

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