COMMODITIES : Grains Rebound; Gold Recovers to $400
A late rally that pushed grain and soybean futures prices higher Thursday on the Chicago Board of Trade could mark a key reversal in the market’s recent downward trend, analysts said.
On other markets, gold struggled back to $400 an ounce; copper surged; frozen pork bellies rose sharply while livestock futures were mixed; energy futures were mostly higher, and stock index futures retreated.
Soybeans for November delivery, which had traded as high as $9.035 a bushel just one week earlier, swung in a 28-cent range Thursday, plunging to $8.15 but settling near the day’s high at $8.42, 4.5 cents above Wednesday’s final price.
Corn and wheat futures also finished moderately higher but were less volatile because of the supportive influence of new export business, analysts said.
“The (soybean) market liquidated early until there just wasn’t any selling left below $8.20. Then the strength in the wheat and corn really supported the bean complex,” said Pat O’Connell, a grain analyst with Refco Inc., a Chicago futures brokerage.
“I think the market told us today that it’s in good shape,” he said.
Ted Mao, grain specialist with Shearson Lehman Hutton Inc. in New York, said the drop to $8.15 “appears now in hindsight to have been the end of the liquidation,” he said.
Much of the buying apparently was based on indications of increased global demand for grain and soybeans, particularly by the Soviet Union. A large purchase this week of U.S. soybean oil by Pakistan also supported the soybean complex, analysts said.
Talk that the United States and the Soviet Union were near agreement on a new long-term grain agreement further fueled the rally, analysts said.
Wheat settled 5.5 cents to 6.75 cents higher, with the December contract at $4.265 a bushel; corn was 0.75 cent to 3.5 cents higher, with December at $2.9125 a bushel; oats were unchanged to 4.25 cents higher, with December at $2.5825 a bushel, and soybeans were 1 cent lower to 5.25 cents higher, with November at $8.42 a bushel.
Silver futures posted solid gains on New York’s Commodity Exchange, and gold for October delivery rallied to $400 an ounce, the psychologically important level the contract had breached Wednesday.
“My gut feeling is that there’s not much of any significance here,” said Jack Barbanel, director of futures trading for Gruntal & Co..
He said the inflation-sensitive gold market reacted to higher grain prices but that the lack of strong inflationary signals would continue to depress speculative buying.
Buying could surface below $390 an ounce, a level that gold is likely to reach within two or three weeks, he said.
Gold settled 60 cents to 80 cents higher, with October at $400 an ounce; silver was 7.1 cents to 7.3 cents higher, with September at $6.25 an ounce.
Copper futures soared on the Commodity Exchange, resuming a monthlong upward trend linked to tight supplies and growing demand, analysts said.
Copper settled 1.8 cents to 3.05 cents higher, with September at $1.1535, a new lifetime high for that contract.
Frozen pork belly futures surged as much as 1.82 cents a pound on the Chicago Mercantile Exchange in a technical rally in the absence of fresh supply and demand factors.