COMMODITIES : Hurricane Whips Up Many Futures Prices
Speculation about Hurricane Gilbert swept through the nation’s commodity exchanges Wednesday, fanning increases in prices of cotton, energy, grain and silver futures while helping to limit gains in the cattle market.
Stock index futures also advanced.
Prices of cotton futures rose sharply for a second day on the New York Cotton Exchange on speculation that rain and wind from the savage storm could lower the quality of cotton in central and western Texas.
“If it hits around Brownsville, most of that cotton is already picked and in modules or warehouses, where it’s protected,” said Ed Whitten, cotton specialist with Balfour Maclaine Corp. in New York.
“But if it moves on north in Texas and hits cotton in the fields, it will do damage and the cotton will lose weight,” he said. “If there are high winds, that’s worse--it could flatten it.”
Too much rain late in the plant’s growth cycle turns the cotton gray and reduces the weight of the fibers, he said.
But Whitten also said the cotton market was oversupplied and would not suffer from even large field losses.
“I’ve heard one comment that if we lost half a million bales, that would be the best thing that could happen,” he said. “We’ve got a million bales too many.”
Energy Futures Soar
Cotton settled 1.10 cents to 1.77 cents higher, with the contract for delivery in October at 56.85 cents a pound.
Energy futures soared on the New York Mercantile Exchange in anticipation that the storm would disrupt oil drilling and refining in the Gulf of Mexico.
Prices for some contracts for unleaded gasoline and heating oil advanced their permitted daily limit of 2 cents a gallon. Contracts for near-month delivery, which carry no limit, rose even higher.
News that the pricing committee of the Organization of Petroleum Exporting Countries would meet Sept. 25 added further support to the oil market, said Nauman Barakat, vice president of energy investments with Prudential-Bache Securities Inc. in New York.
But if the OPEC panel makes no progress on curbing the cartel’s oil production, “prices will sell off as quickly as they ran up,” Barakat said.
West Texas Intermediate crude oil settled 44 cents to 84 cents higher, with October at $15.40 a barrel; heating oil was 2 cents to 2.24 cents higher, with October at 44.07 cents a gallon, and unleaded gasoline was 1.48 cents to 3.21 cents higher, with October at 47.02 cents a gallon.
Grain and soybean futures finished mostly higher on the Chicago Board of Trade on new export demand and speculation that Hurricane Gilbert would damage crops, analysts said.
Gilbert’s record-high winds and heavy rain could damage soybean crops in Louisiana and Mississippi, and storms spawned by the hurricane could wreak havoc on corn and soybeans in the Midwest, where a summer drought has left plants weak, analysts said.
Wheat Prices Advance
Corn also benefited from Tuesday’s news that the Soviet Union had purchased 350,000 metric tons of U.S. corn from private exporters, while wheat futures were supported by reports of new foreign bids for U.S. wheat.
Gold and silver futures initially rose along with energy prices, but gold retreated slightly before the close on New York’s Commodity Exchange.
Gold settled 10 cents to 20 cents lower, with October at $422.70 an ounce; silver was 1 cent to 1.2 cents higher, with September at $6.489 an ounce.
The prospect that rains from the hurricane could improve pasture conditions in Texas and Kansas limited gains in cattle futures on the Chicago Mercantile Exchange.
Stock index futures advanced on the Chicago Mercantile Exchange, where the contract for September delivery of the Standard & Poor’s 500 index settled 1.45 points higher at 269.45.
