COMMODITIES : Rain in Midwest Hurts Soybean Prices

Corn, oat and soybean futures plunged their permitted daily limits Monday on the Chicago Board of Trade following unexpectedly heavy showers on the Corn Belt’s northwestern edge and forecasts for rain in the central Midwest.

On other markets, livestock and meat futures were mixed, precious metals fell and stock index futures retreated.

Wheat futures also closed lower in Chicago. But with rain in the forecasts, the selling pressure in the grain pits was focused on corn and soybeans--the crops that still stand to gain or lose, depending on the weather.

A storm system that brought up to an inch of rain to much of Minnesota, Wisconsin and northern Iowa on Sunday was expected to pour water on drought-stressed crops in the central Midwest on Monday night and today.

“There’s rain around and there’s more rain coming,” said Victor Lespinasse, a trader for Dean Witter Reynolds Inc. “That’s what broke the back of the bulls today.”

Orderly Selloff

Cooler temperatures were expected in the storm system’s wake. The crops were badly in need of both moisture and cooler conditions, especially the soybean crop, which is in the middle of its most vulnerable growth phase, analysts said.

Lespinasse said the selloff was “very gradual, very orderly.”

Prices opened sharply below Friday’s closing levels, then gradually fell their limits--10 cents a bushel for corn and oats, and 30 cents a bushel for all soybean contracts except the August contract, on which limits have been removed pending its expiration on Aug. 22.

After the close, the National Weather Service issued a 6-to-10-day outlook predicting above-normal temperatures and normal rainfall in most of the Midwest during the first five days of next week.

In addition to watching the weather, grain traders are eagerly awaiting Thursday’s crop report from the Agriculture Department.

The report will contain the government’s first grain and soybean production estimates based on field surveys and is expected to show a deterioration of crop conditions during July.

Crop Damage Estimates

The USDA’s last crop report was believed to have reflected most of the drought damage done to the corn crop, with a predicted production of 5.2 billion bushels, about 30% less than last year.

But intense speculation surrounds the USDA’s soybean production figure, which is expected to come out sharply lower than 1.65 billion bushels, the last official estimate.

Soybean production estimates released by private grain analysts over the last few days have ranged from 1.4 billion to 1.54 billion bushels.

Ted Mao, grain specialist in New York with Shearson Lehman Hutton Inc., said Thursday’s USDA report “will put to rest, to a certain extent, the magnitude of ranges as far as crop damage estimates are concerned.”

Wheat settled 2.25 cents to 6 cents lower, with the contract for delivery in September at $3.763 a bushel; corn was 3.5 cents to 10 cents lower, with September at $2.968 a bushel; oats were 10 cents lower across the board, with September at $2.735 a bushel, and soybeans were 13.5 cents to 36.5 cents lower, with August at $8.40 a bushel.

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