COMMODITIES : Platinum Soars After Shortage Predicted

Platinum futures prices broke with the other precious metals markets Wednesday and surged upward in reaction to forecasts for a supply shortfall in the coming year.

On other markets, gold and silver were mostly higher; sugar futures fell sharply; frozen pork bellies plunged again; livestock, energy, grains and soybeans were mixed, and stock index futures advanced.

A report by leading platinum refiner Johnson Matthey PLC saying platinum demand could outstrip supply by 450,000 ounces in 1989 sparked buying of platinum futures on the New York Mercantile Exchange, analysts said.

The British company said supplies of platinum could remain tight for the next five years.

Platinum for delivery in October rose $8.80 to $494.40 an ounce. October platinum had finished below $490 in the three previous sessions as the market mimicked the weakness in gold prices.

The main buyers Wednesday were commercial consumers of platinum, said Richard Levine, vice president of the precious metals and foreign exchange group of Elders Futures Inc.

“This indicates a lot of consumers of platinum have been waiting for a decline (in price) to cover their requirements. There was a lot of forward buying going on,” he said. “I think they’ll still be there if the market goes back down.”

Gold futures rose slightly on New York’s Commodity Exchange but the spot price remained below $400 an ounce. Gold, pressured by slack demand in light of the low inflation rate, settled below $400 one week ago for the first time in 19 months.

Analyst Bette Raptopoulos of Prudential-Bache Securities Inc. in New York said slight increases in gold and silver prices this week indicated that the precious metals markets were consolidating and possibly readying for a rally.

Sugar Sours

But Levine noted that spot gold and platinum had not broken through their respective barriers of $400 and $500 an ounce.

Gold settled 80 cents to $1.20 higher, with October at $398.70 an ounce; silver was 0.6 cent lower to 0.8 cent higher, with September at $6.166 an ounce.

Sugar futures prices fell sharply on New York’s Coffee, Sugar & Cocoa Exchange following a powerful rally on Tuesday.

Sugar settled 0.18 to 0.40 cent lower, with October at 9.46 cents a pound.

Frozen pork belly futures plummeted for the second straight day on the Chicago Mercantile Exchange as traders sought to align futures prices more closely with the lower cash market, said Tom Morgan, president of Sterling Research Corp. in Arlington Heights, Ill.

Hog futures also retreated, possibly on selling by traders who were rethinking their bullish projections for the Agriculture Department’s quarterly hogs-and-pigs report, which will be released Friday.

The report is a tally of the hog-and-pig herd in the 10 largest pork-producing states.