COMMODITIES : Corn, Sugar Prices Dip, Other Markets Mixed
Corn and sugar futures prices fell sharply Thursday in trading that analysts said was inspired by technical conditions and had little to do with fundamental supply-and-demand factors.
Most wheat and soybean futures also slipped lower on the Chicago Board of Trade, and coffee futures joined sugar in falling for a third straight day on New York’s Coffee, Sugar & Cocoa Exchange.
On other markets, precious metals were lower, cattle were up, pork futures plunged and energy futures were mixed.
Thursday marked the fifth consecutive day of falling corn futures prices and the ninth straight daily drop in the price for August delivery of soybeans.
But in a departure from the past three months, the weather had little impact on the markets, analysts said.
Instead, they said corn traders were watching their market’s open interest, a rough measure of the number of speculators who have--in effect--placed their bets but not collected their winnings.
Open interest has been running at an unusually high level in the corn market and stood at more than 244,000 contracts when the market opened Thursday.
The majority of the open interest was believed to represent “long” positions, or wagers that prices would rise. Since prices have been falling, some players feared that many holders of those long positions were preparing to sell and either cut their losses or settle for only a slight profit.
A sudden, massive selloff would cause prices to plummet and some traders tried to beat the rush by selling ahead of it, which caused corn prices to fall sharply anyway.
The selling sentiment spread to the neighboring wheat and soybean pits, causing prices to fall in those markets, too, said Walter Spilka, an analyst in New York with Smith Barney, Harris Upham & Co.
The National Weather Service’s latest 6-to-10-day forecast, calling for normal rainfall next week in the drought-stricken Midwest, was bearish but it was not a major factor in Thursday’s action, Spilka said.
“I think weather forecasts are maybe contributing about half the influence right now (and) I think near-term forecasts are more important than the 6-to-10-days,” he said.
Wheat settled 4 cents to 5.5 cents lower, with the contract for delivery in September at $3.57 a bushel; corn was 14.75 cents lower to 2 cents higher, with September at $2.65 a bushel; oats were 3 cents lower to 7.5 cents higher, with September at $2.565 a bushel, and soybeans were 12 cents lower to 15 cents higher, with August at $7.415 a bushel.
The situation was similar in the sugar market, which ignored the bullish news of new sugar purchases by China and plummeted to its lowest level in about a month.
“This was a technically driven selloff,” said Judith Ganes, sugar analyst with Shearson Lehman Hutton Inc. in New York.
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