COMMODITIES : Frost Fears Send Corn, Soybean Prices Sharply Higher
Fears that frost could nip the Corn Belt as early as this weekend helped send corn and soybean futures prices sharply higher Wednesday on the Chicago Board of Trade. Wheat and oats also advanced.
On other markets, coffee, livestock, precious metals and stock index futures all rose while energy futures finished mostly lower.
Meteorologists and grain analysts were skeptical of the Midwest frost talk, which helped drive Chicago corn futures prices up the permitted daily limit of 10 cents a bushel.
“It’s not going to happen,” said James Roemer, a meteorologist and commodities adviser for Freese-Notis Weather Inc. and Weather Trades Inc., both of Des Moines, Iowa.
“There’s going to be some 30s and 40s in parts of Michigan and parts of the Great Lakes region so it’ll be cool for the weekend and then we’ll be warming up again next week,” he said.
National Weather Service meteorologist Jane Hollingsworth in Chicago predicted lows in the 40s this weekend in the Northern Plains and Great Lakes region, but said there were no indications for freezing temperatures in the Midwest, she said.
Early Freeze
The National Weather Service predicted above-normal temperatures and below-normal rainfall for the Midwest next week.
Roemer said early frosts--early meaning September--followed two of the last four summer droughts, in 1974 and 1983.
He said the early freeze in 1974 wiped out a large part of the soybean crop but added that this year’s crops were maturing at an above-average pace, so frost would have to occur no later than Sept. 20 to cause significant damage.
Jerry Gidel, an analyst with G. H. Miller & Co., a Chicago-based division of the British-owned trading company LIT America Inc., called the freeze talk “crazy.”
“I find it hard to believe with all the hot weather we’ve had,” he said.
Crop futures also advanced on perceptions that rain was slowing the wheat harvest in the Soviet Union, possibly reducing the amount of wheat that will be harvested there, Gidel said.
Wheat settled 1.50 cents to 7 cents higher, with the contract for delivery in September at $3.9075 a bushel; corn was 4 cents to 10 cents higher, with September at $2.8375 a bushel; oats were 5 cents to 6.75 cents higher, with September at $2.54 a bushel, and soybeans were 12 cents to 27.50 cents higher, with September at $8.3150 a bushel.
Demand for Beef
Coffee futures surged on New York’s Coffee, Sugar and Cocoa Exchange on continuing concerns about dry weather in Brazil, the world’s leading coffee producer and exporter.
Coffee settled 2.91 cents to 5.46 cents higher, with September at $1.2668 a pound.
Unexpectedly strong demand for beef by retailers boosted cattle futures on the Chicago Mercantile Exchange, while strong cash hog markets helped to push the pork futures higher, analysts said.
Live cattle settled unchanged to 0.83 cent higher, with October at 71.30 cents a pound; feeder cattle were 0.33 cent to 1.05 cents higher, with August at 81.75 cents a pound; hogs were unchanged to 0.40 cent higher, with October at 40.47 cents a pound, and frozen pork bellies were 0.35 cent to the limit 2 cents higher, with August at 37.97 cents a pound.
Precious metals rallied on the New York Mercantile Exchange on mostly technical factors with the inflationary implications of the weaker dollar providing additional support, said Jack Barnanel, director of futures trading for Gruntal & Co. in New York.
Gold settled $2.60 to $2.80 higher, with October at $438.60 an ounce; silver was 5 cents to 5.4 cents higher, with September at $6.79 an ounce.
Stock index futures advanced sharply in a technically motivated, late-afternoon surge on the Chicago Mercantile Exchange, where the contract for delivery of the Standard & Poor’s 500 index settled 4.45 points higher at 261.75.
Most energy futures slipped lower in lethargic trading on the New York Mercantile Exchange.
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