COMMODITIES : Dollar, Recession Fears Hurt Precious Metals
Prices of platinum and silver futures fell sharply Monday in reaction to weaker commodity markets, a stronger dollar and fears of an economic slowdown, analysts said.
On other markets, frozen pork bellies futures plunged their permitted daily limit, livestock futures were mixed, cotton was sharply higher, grains and soybeans weakened, energy futures were mixed and stock index futures rallied.
The inflation-sensitive precious metals were led by the platinum market, where trading activity was unusually thin because of holidays that kept Asian and European traders away.
The dollar’s increasing strength throughout the day appeared to be the major negative influence but weakness in the grain, livestock and energy futures markets also contributed to the lack of buying interest in the metals, said Bette Raptopoulos, metals analyst with Prudential-Bache Securities Inc. in New York.
“Much of it was due to the fact that the London and Hong Kong markets were closed” for a holiday, she said, calling the selloff “excessive.”
Analyst Bernard Savaiko of Paine Webber Inc. in New York, noted that the selling was concentrated in the silver and platinum markets while gold futures prices declined only modestly.
“Platinum and silver are industrial metals, and it seems people are becoming more concerned about the possibility of an economic slowdown,” he said. “The word is that the Federal Reserve is going to continue to increase interest rates, and that’s keeping investors sidelined.”
On the New York Mercantile Exchange, platinum settled $8.50 to $9.60 lower, with the contract for delivery in October at $532.60 an ounce.
Double Whammy
On New York’s Commodity Exchange, gold was $2.70 lower across the board, with October at $432.90 an ounce; silver was 13.5 cents to 14 cents lower, with September at $6.52.
Increased hog slaughters and falling cash prices for pork products put a double whammy on the pork futures market at the Chicago Mercantile Exchange.
Many traders had expected hog slaughters to rise as temperatures in the Corn Belt fell. Hogs do not travel well in hot weather, and traders suspected that producers were holding their animals back.
“I think basically the market’s telling us that we have finally gotten into this large supply of hogs we’ve been waiting for,” said Philip Stanley, livestock market analysts with Thomson McKinnon Securities Inc. in Chicago.
“Now that it’s cooled off, I think this supply is going to carry us right through the fourth quarter.”
Frozen pork bellies for February delivery plunged the 2-cents-a-pound limit, and other contracts also finished sharply lower.
Meatpackers continued to pay top dollar for fattened cattle, which helped support the cattle futures, he said.
Live cattle were 0.25 cent lower to 0.25 cent higher, with October at 73.22 cents a pound; feeder cattle were unchanged to 0.37 cent higher, with September at 82.25 cents a pound; hogs were 0.03 cent to 1.10 cents lower, with October at 39.95 cents a pound; frozen pork bellies were 1.72 cents to 2 cents lower, with February at 52.82 cents a pound.
Cotton futures advanced sharply on the New York Cotton Exchange on concerns about dwindling supplies of certificated cotton available for delivery against the October contract, analysts said.
Increased foreign and domestic demand and a bullish technical picture also contributed to cotton’s rally, said Ernest Simon, cotton specialist in New York with Prudential-Bache Securities.
Wheat, Corn Slip
Cotton for October delivery settled 1.27 cents higher at 53.52 cents a pound.
Grain and soybean futures finished mostly lower on the Chicago Board of Trade in a late, partial recovery from a steep selloff that occurred earlier in the session.
Traders linked the early declines to fears that a high number of delivery notices would be posted Wednesday against the September contracts, indicating the potential for a large release of stored grains and soybeans onto the open market.
But prices eventually recovered because of end-of-the-month book squaring.
Wheat settled 2.25 cents lower to 1.24 cents higher, with September at $3.8775 a bushel; corn was 1.25 cents to 6 cents lower, with September at $2.745 a bushel; oats were 4 cents to 5.25 cents lower, with September at $2.495 a bushel, and soybeans were 6.5 cents lower to 2.5 cents higher, with September at $8.25 a bushel.
Oil futures prices finished mixed in quiet trading on the New York Mercantile Exchange.
West Texas Intermediate crude oil was 14 cents lower to 12 cents higher, with October at $15.22 a barrel; heating oil was 0.26 cent lower to 0.09 cent higher, with September at 42.76 cents a gallon, and unleaded gasoline was 0.24 cent lower to 0.45 cent higher, with September at 47.24 cents a gallon.
Stock index futures posted substantial gains on the Chicago Mercantile Exchange, where the contract for September delivery of the Standard & Poor’s 500 index settled 3.30 points higher at 263.
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