COMMODITIES : Massive Selloffs Sink Futures Prices

Soybean futures prices plunged for the seventh straight day Tuesday, triggering massive selloffs and huge price declines in several other U.S. commodity markets as speculators took profits.

“Today, the commodities had their Black Tuesday,” said Bert Ruiz, vice president in charge of coffee futures at Balfour Maclaine Corp. “Everybody was getting out of commodities.”

Grain futures plunged along with soybeans on the Chicago Board of Trade while prices for coffee, sugar, livestock and silver futures plummeted on other exchanges. Energy futures declined moderately while stock index futures advanced.

The Commodity Research Bureau’s index of 21 commodities skidded 8.11 points to 245.52, the steepest one-day drop for the closely watched inflation barometer since its record 9.7-point fall on Dec. 11, 1980.

Most Chicago crop futures fell their permitted daily limits on better rain prospects in the Midwest and reports that recent showers had helped the crops.

“It’s a real panic right now,” said Katharina Zimmer, grains analyst with Merrill Lynch Capital Markets in New York. “You’ve got people just saying, ‘Let me out.’ They’re scrambling.”

Normal Rain Forecast

The contract for August delivery of soybeans settled at $7.555 a bushel, the lowest soybean futures price since May 26, when the July contract settled at $7.54.

The National Weather Service’s latest 6-to-10-day outlook, issued late Monday, predicted normal precipitation in most of the Midwest during the first five days of next week.

And the Joint Agricultural Weather Facility said Tuesday that scattered showers in the Midwest during the past week had relieved drought stress in parts of the Corn Belt. State agriculture officials generally reported improved corn and soybean conditions.

Cathy Leow, assistant vice president of grain futures trading for Thomson McKinnon Securities Inc. in New York, said the soybean market was probably nearing a bottom after losing nearly $2.40 a bushel in the past seven sessions.

“I think the market has overdone the rains we’ve gotten and it’s still ignoring the fact that we have a phenomenal amount of (crop) damage,” she said.

The next official estimate of the drought damage will be the Agriculture Department’s next crop report on Aug. 11.

Wheat settled 19 cents to the limit 20 cents lower, with the contract for delivery in September at $3.518 a bushel; corn was 9.25 cents to the limit 15 cents lower, with September at $2.875 a bushel; oats were 9 cents to the limit 10 cents lower, with September at $2.44 a bushel, and soybeans were 18.5 cents to the limit 45 cents lower, with August at $7.555 a bushel.

Bullish News Ignored

Sugar and coffee futures tumbled on New York’s Coffee, Sugar & Cocoa Exchange in massive selloffs.

Analysts linked the selling to disappointment over the markets’ inability to break free of the bearish influence of the soybean market, even when positive news surfaced.

The sugar market, for example, ignored bullish news that China had bought 250,000 tons of sugar, said Judith Ganes, an analyst with Shearson Lehman Hutton Inc. in New York.

She described the sugar selloff as “massive, massive liquidation and profit taking.”

Coffee analyst Ruiz said heavy news coverage of the Midwestern drought had persuaded many small investors to gamble on rising commodity prices “and today was the blood bath.”

Coffee for September delivery settled 4.84 cents lower at $1.3295 a pound; October sugar was 2.41 cents lower at 12.06 cents a pound.

Most most livestock and meat futures prices fell sharply on the Chicago Mercantile Exchange.

Silver Futures Decline

Live cattle settled 0.48 cent to 1.15 cents lower, with August at 65.87 cents a pound; feeder cattle were 0.45 cent lower to 0.10 cent higher, with August at 77.57 cents a pound; hogs were 0.22 cent to the limit 1.50 cents lower, with August at 45.30 cents a pound, and frozen pork bellies were 1.15 cents to the limit 2 cents lower, with August at 34.80 cents a pound.

Gold futures advanced but silver fell steeply in mostly technical trading on New York’s Commodity Exchange, analysts said.

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