COMMODITIES : Hot Weather Forecasts Drive Up Grain Prices

Grain and soybean futures posted their strongest gains in a week Monday in response to predictions that crops in the drought-weary Corn Belt would bake in triple-digit heat for most of this week.

On other markets, most livestock and meat futures rose, precious metals advanced, energy futures were higher and stock index futures retreated.

Monday’s midday weather forecasts, coming on the heels of a hot, mostly dry weekend in the Midwest, stoked fears of further damage to the crops and helped push most corn, oat and soybean contracts up their permitted daily limits on the Chicago Board of Trade.

Lower Yields Expected

Meteorologists said the same weather pattern that had made the spring and early summer unseasonally warm and dry was re-establishing itself and intensifying, promising at least several more days of searing heat in the Midwest.

“We’re going to have extreme heat right into Thursday, 100 to 110 degrees in the Corn Belt,” said Charles Notis, a private forecaster based in Des Moines, Iowa.

After the close, the National Weather Service issued a six- to 10-day outlook predicting above-normal temperatures but normal to above-normal rainfall for the Farm Belt during the first five days of next week.

Analysts said the soybean crop was near the end of its vulnerable flowering and pod-setting stage, a four- to six-week period during which weather plays a crucial role in determining yields.

The hot weekend weather probably caused some deterioration of the soybean crop, analysts said. And the forecasts for similar weather this week likely means that yields will fall further, making contracts for future deliveries of soybeans more precious, onme analyst said.

Corn and oat futures soared their 10-cent-a-bushel daily limit. Soybeans were limited to moves of 30 cents a bushel, except for the limitless August contract, which finished with a gain of more than 38 cents.

Wheat settled 9 cents to 14.5 cents higher, with the contract for delivery in September at $3.92 a bushel.

Corn was 7.75 cents to 10 cents higher, with September at $2.9725 a bushel; oats were 7.5 cents to 10 cents higher, with September at $2.875 a bushel, and soybeans were 27.5 cents to 38.5 cents higher, with August at $8.87 a bushel.

Livestock and meat futures finished mostly higher on the Chicago Mercantile Exchange before the Agriculture Department’s monthly seven-state cattle-on-feed report.

The government reported that cattle marketings during July were 4% higher than the same month a year ago, which surprised most analysts and prompted predictions of a sharply higher opening today.

Cattle Number a Surprise

The number of cattle on feed Aug. 1 in the seven largest cattle-producing states was 2% larger than a year ago, while 2% fewer cattle were placed on feedlots in those states during July.

The high marketing number startled analysts, most of whom had expected a decline. The number meant there had been fewer drought-related sales of cattle to packing houses than analysts had believed, said Chuck Levitt, an analyst with Shearson Lehman Hutton Inc. in Chicago.

Live cattle closed 0.07 cent to 0.45 cent higher, with August at 69.60 cents a pound; feeder cattle were 0.20 cent to 1.15 cents higher, with August at 81.75 cents a pound; hogs were 0.05 cent to 0.57 cent higher, with August at 47.37 cents a pound, and frozen pork bellies were 0.52 cent lower to 0.70 cent higher, with August at 33.65 cents a pound.

Precious metals futures posted modest gains on the Commodity Exchange in New York in response to the inflationary implications of higher prices for most other commodities, said Bernard Savaiko, an analyst in New York with Paine Webber.

Gold settled $1.70 to $2 higher, with August at $433 an ounce; silver was 4.5 cents to 4.6 cents higher, with September at $6.785 an ounce.

Energy futures prices rose on the New York Mercantile Exchange in thin dealings in the absence of major fresh news to drive the market.

West Texas Intermediate crude oil settled 4 cents to 14 cents higher, with September at $15.61 a barrel; heating oil was 0.23 cent to 0.41 cent higher, with September at 44.27 cents a gallon, and unleaded gasoline was 0.39 cent to 0.75 cent higher, with September at 46.37 cents a gallon.

Stock index futures slumped on the Chicago Mercantile Exchange amid fears of rising interest rates, analysts said. The contract for September delivery of the Standard & Poor’s 500 index settled 3.45 points lower at 259.10.

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