COMMODITIES : Forecasts of Rain in Brazil Dampen Soybean Futures

Grain and soybean futures prices dipped sharply Monday on the Chicago Board of Trade in a selloff led by a single large trading company and apparently linked to forecasts for rain in Brazil.

On other markets, futures prices for oil and precious metals futures declined while stock index and pork futures advanced and cattle futures were mixed.

Soybean and corn futures sustained deeper losses than the wheat market on the Board of Trade, with a strong lineup of export tenders supporting wheat futures, analysts said.

In otherwise thin market conditions, Iowa Grain Co., a large, speculative trading firm, was said to have sold contracts representing about 5 million bushels each of wheat, corn and soybeans and hundreds of metric tons of soybean meal and soybean oil.

Thomas Cunningham, president of the Chicago-based company, could not be reached for comment. But observers said Iowa Grain had purchased the contracts on Friday while many smaller players were selling due to forecasts for a fairly wet weekend in Brazil, the world’s second-largest soybean producer after the United States.

Weather Key for Soybeans

South America’s weather has been unusually dry during the ongoing planting period and has become a driving force in the U.S. soybean futures market.

Brazil’s weekend turned out to be drier than expected, which should have given the markets a boost on Monday, analysts said.

“But if one big house comes in and does something very, very large, that can have a big impact,” said Victor Lespinasse, a trader with Dean Witter Reynolds Inc. in Chicago.

Frank Kuba, a Chicago-based grain analyst with Shearson Lehman Hutton Inc., said some meteorologists were predicting more rain in South America this week and that those forecasts may have sparked the selloff.

“Our forecasters did not agree with that but the market got wind of some other forecasts,” he said.

Slack export demand for soybeans and some light farmer selling also pressured the market but speculative selling was the dominant factor, said Mario Balletto, soybean market analyst with Merrill Lynch Capital Markets Inc. in New York.

“I think you just saw the buyers on Friday--which was buying in case there were weather problems this week in Brazil--turning around and selling it back now that there is some rain in the forecast,” Balletto said.

Technical Reasons

Wheat settled 5 cents to 6.25 cents lower, with the contract for delivery in December at $4.1375 a bushel; corn was 1.5 cents to 6.25 cents lower, with December at $2.525 a bushel; oats were 3.25 cents to 4.25 cents lower, with December at $1.91 a bushel, and soybeans were 3 cents to 12 cents lower, with January at $7.5675 a bushel.

Oil futures prices declined on the New York Mercantile Exchange in quiet trading dominated by technical factors.

“There was no news to speak of in the marketplace (and) . . . trading appeared to be technically generated,” said Bob Baker, senior energy analyst for Prudential-Bache Securities Inc.

West Texas Intermediate crude oil settled 30 cents to 38 cents lower, with the contract for delivery in January at $15.34 a barrel; heating oil was 0.60 cent to 0.78 cent lower, with January at 48.36 cents a gallon, and unleaded gasoline was 0.75 cent to 1.13 cents lower, with January at 44.44 cents a gallon.

Gold and silver futures prices fell modestly on New York’s Commodity Exchange, with gold for February delivery unable to penetrate technical resistance at $436.70 an ounce, Friday’s settlement price.

“Actually, I’m kind of surprised it didn’t sell off more than it did,” said Richard Levine, vice president of precious metals and foreign exchange trading with Elders Futures Inc. in New York.

Gold settled $2.40 to $2.50 lower, with February at $434.20 an ounce; silver was 2.5 cents to 3 cents lower, with March at $6.31 an ounce.

Pork Futures Gain

Stock index futures posted sharp gains on the Chicago Mercantile Exchange, reflecting a lessening of investor worries about rising interest rates, analysts said.

The contract for March delivery of the Standard & Poor’s 500 index settled 3.50 points higher at 278.95. Each point is worth $500.

Pork futures gained on the Chicago Mercantile Exchange on expectations for falling slaughter levels and rising cash prices for the rest of the year, analysts said.