COMMODITIES : Heat Wave Raises Fears; Soybeans Up Sharply
Soybean, corn and oat futures prices shot up their permitted daily limits Monday on the Chicago Board of Trade amid fears that the latest heat wave in the Midwest will do further damage to drought-stressed crops.
Wheat futures also closed sharply higher.
On other exchanges, coffee futures plummeted; cattle futures were sharply higher while pork futures were sharply lower; precious metals were mixed; energy futures were mixed, and stock index futures retreated.
The return of hot, dry weather to the Corn Belt after a two-week reprieve holds a particular threat to the soybean crop, which is in the middle of its critical pod-filling stage, analysts said.
Hot temperatures--95 degrees or higher--are even more detrimental to soybeans than lack of moisture at this growth stage, said Rich Feltes, director of commodity research with Refco Inc., a large, Chicago-based commodities brokerage house.
Temperatures approached or exceeded 100 degrees Monday afternoon in the central Corn Belt states of Iowa, Illinois, Missouri and Wisconsin, and the hot, dry weather was expected to persist for most of the week.
“If these high temperatures continue, we’re looking at a potentially serious shortfall in soybean production, even with the recent rains in the eastern Corn Belt,” Feltes said.
Victor Lespinasse, a trader with Dean Witter Reynolds Inc., said the critical period for soybean development would run through the third week in August.
“The next two to three weeks are going to make or bake the soybean crop, and it looks like we’re going to bake it,” he said.
Most contracts for future delivery of oats, corn and soybeans closed up their respective daily limits of 10 cents, 15 cents and 45 cents a bushel. The August soybean contract, on which the limit has been removed pending the contract’s expiration later this month, gained 63 cents.
Wheat settled 8.5 cents to 14 cents higher, with September at $3.81 a bushel; corn was 13.75 cents to 15 cents higher, with September at $2.90 a bushel; oats were 10 cents higher across the board, with September at $2.815 a bushel, and soybeans were 27 cents to 63 cents higher, with August at $8.39 a bushel.
Hot weather also contributed to limit losses in coffee futures on New York’s Coffee, Sugar & Cocoa Exchange.
Coffee consumption typically hits its lowest point in mid-summer, and expectations that cash prices will fall prompted heavy speculative selling of coffee futures, said Sandra Kaul, an analyst with Shearson Lehman Hutton Inc.
Three coffee contracts settled down the six-cent daily limit. The limitless September contract plunged 8.05 cents to settle at $1.1667 a pound.
Cattle futures dipped on the Chicago Mercantile Exchange in response to Friday’s semiannual cattle inventory report from the Agriculture Department, which showed the nation’s cattle herd to be larger than the markets had anticipated.
Analysts said the sharp rise in grain prices also weighed on prices for near-term delivery of cattle; feeder cattle for September and October delivery plunged the 1.50-cents-a-pound daily limit.
Limit advances in the pork pits were fueled by fears that hot, humid weather would decrease the number of hogs brought to market this week and by rising cash prices for pork bellies, said Philip Stanley, an analyst with Thomson McKinnon Securities Inc.
Live cattle were 0.35 cent to 0.95 cent lower, with August at 66.17 cents a pound; feeder cattle were 1.50 cents lower to 0.10 cent higher, with August at 78.37 cents a pound; hogs were 0.55 cent to 1.50 cents higher, with August at 45.30 cents a pound, and frozen pork bellies were unchanged to 2 cents higher, with August at 32.52 cents a pound.
Silver futures gained while gold retreated on New York’s Commodity Exchange.
Silver, which had fallen sharply last week, bounced back on bargain hunting and confirmation that Peru’s state-owned mining company, Centromin, had stated that it might not meet its contractual obligations to deliver silver because of a 2-week-old miners strike, analysts said.
Gold settled $1.70 lower across the board, with August at $434.40 an ounce; silver was 6 cents to 6.9 cents higher, with September at $6.915 an ounce.
Crude oil futures prices fell slightly and oil products finished mixed in quiet trading on the New York Mercantile Exchange as traders looked ahead to Wednesday’s scheduled meeting of OPEC’s price monitoring committee.
West Texas Intermediate crude oil settled 23 cents to 25 cents lower, with September at $16.08 a barrel; heating oil was 0.03 cent lower to 0.15 cent higher, with September at 45.12 cents a gallon, and unleaded gasoline was 0.70 cent lower to 0.46 cent higher, with September at 48.59 cents a gallon.
Stock index futures retreated slightly on the Chicago Mercantile Exchange, where the contract for September delivery of the Standard & Poor’s 500 index settled 0.60 point lower at 272.65.
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