COMMODITIES : Grain Prices Fall but Rebound Expected

Grain and soybean prices closed mostly lower Thursday on the Chicago Board of Trade, but market analysts said new government estimates of a sharply smaller harvest could send prices higher today.

After trading closed for the day, the Agriculture Department predicted the smallest harvest in 12 years from America’s drought-stressed soybean fields.

On other markets Thursday, cattle futures moved lower while pork futures advanced; precious metals were mixed; energy futures gained, and stock index futures rose.

The USDA estimated 1988 soybean production at 1.47 billion bushels based on crop conditions Aug. 1. That would be the smallest U.S. soybean crop since the 1976 harvest of 1.29 billion bushels.

Soybean Estimate Declines

The government’s soybean estimate was well below market expectations and should drive prices higher at this morning’s opening on all the Chicago crop futures markets, said Jerry Gidel, an analyst in Chicago with the G. H. Miller Division of LIT America Inc., a British-owned commodities trading firm.

The soybean estimate represents a 23% decline from last year’s 1.91 billion-bushel harvest. Grain traders and crop analysts had been expecting about a 20% reduction.

“Well, you can’t say the USDA’s holding back on that one,” Gidel said. “They impressed everybody.”

He said corn prices could rise despite the USDA corn production estimate of 4.48 billion bushels, which was higher than the market had expected. The number represents a 37% drop from last year’s harvest of 7.06 billion bushels.

The USDA estimated wheat production at 1.82 billion bushels, 14% below the 1987 crop; and oat production at 206 million bushels, 45% lower than the 1987 harvest.

Trader Victor Lespinasse of Dean Witter Reynolds Inc. said the crop report could push grain prices higher today, but said the increasing prospect of rain in the Midwest today, Saturday and Sunday could lead to some selling.

Several private meteorologists added rain to their forecasts on Thursday, citing moisture moving northward from a tropical depression near the Gulf Coast. The forecasts sparked a light selloff near the close of Thursday’s session.

Pork Futures Rally

Wheat settled 1 cent lower to 1 cent higher, with the contract for delivery in September at $3.825 a bushel; corn was 2.5 cents to 3.5 cents lower, with September at $2.9725 a bushel; oats were 2 cents to 3 cents higher, with September at $2.745 a bushel, and soybeans were 6.5 cents to 19.5 cents lower, with August at $8.56 a bushel.

Pork futures rallied Thursday on the Chicago Mercantile Exchange as cash prices rose but cattle futures retreated on profit taking despite continued strength in the cash cattle markets.

“Fundamentally it’s hard to justify a break (in cattle futures prices) but I guess the market needed one after being so strong earlier in the week,” said Philip Stanley, a livestock analysts with Thomson McKinnon Securities Inc. in Chicago.

Stanley said a leap in soybean futures prices could bring a corresponding jump in pork futures prices because soybean meal is used as feed for hogs.

Live cattle settled 0.10 cent to 0.43 cent lower, with August at 69.05 cents a pound; feeder cattle were 0.03 cent to 0.50 cent lower, with August at 80.90 cents a pound; hogs were 0.45 cent lower to 0.72 cent higher, with August at 46.62 cents a pound, and frozen pork bellies were 0.17 cent to 0.97 cent higher with August at 35.72 cents a pound.

Gold, Silver Unchanged

Gold and silver prices were nearly unchanged Thursday on New York’s Commodity Exchange.

The inflationary implications of a rise in grain prices should give the precious metals markets a boost, said John O’Connell, metals analyst in New York with Refco Inc.

“The crop report is likely to influence the metals for the next day or two,” he said. “It looked like some pretty horrendous numbers for the beans.”

Gold settled 20 cents lower to 10 cents higher, with August at $429.30 an ounce; silver was 0.5 cent to 1.2 cents higher, with September at $6.715 an ounce.

Energy futures prices finished mostly higher in light trading on the New York Mercantile Exchange after fluctuating in a narrow range.

West Texas Intermediate crude oil settled 5 cents to 23 cents higher, with September at $15.76 a barrel; heating oil was 0.13 cent to 0.41 cent higher, with September at 44.56 cents a gallon, and unleaded gasoline was 0.15 cent lower to 0.45 cent higher, with September at 46.02 cents a gallon.

Stock index futures advanced on the Chicago Mercantile Exchange, where the contract for September delivery of the Standard & Poor’s 500 index settled 1.15 points higher at 263.20.

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