COMMODITIES : Pork Futures Prices Skid; T-Bonds Jump on Rumors

Prices of pork futures plunged to limit-down levels Tuesday after a late selloff by traders worried that frozen pork bellies are piling up at already overstocked warehouses.

On other markets, Treasury bond futures soared on rumors that improving superpower relations--exemplified by Soviet President Mikhail S. Gorbachev’s visit--may ultimately mean lower U.S. defense spending levels and a meaningful cut in the budget deficit; grain and soybeans futures prices finished sharply higher in the wake of one trading firm’s daylong trading machinations, and platinum futures posted an impressive gain as gold and silver slipped slightly.

“We had quite a selloff,” said Chuck Levitt of Shearson Lehman Hutton Inc. in Chicago. “But then, the pork complex has been like water running upstream the last couple of sessions.”

Levitt said generally good underlying cash prices for the pork bellies at this time of year led many traders to view the futures market as undervalued.

“But every Tuesday we get a report on warehouse supplies . . . on how much product is actually pouring into storage and we get some liquidation. In this situation,” he added, “no one was around to stick up for the markets.”

The Chicago Mercantile Exchange’s out-of-town warehouse report, released after trading closed Tuesday, was even more bearish than most traders expected. Stocks in 48 approved warehouses, which represent the majority of bellies in storage nationwide, showed a net gain of 7.2 million pounds over the previous week.

Treasury Futures Rise

At the Merc, live cattle settled 0.08 cent lower to 0.05 cent higher, with the contract for delivery in December at 71.37 cents a pound; feeder cattle were unchanged to 0.35 cent lower, with January at 82.25 cents a pound; hogs were 0.55 cent lower to 0.05 cent higher, with December at 40.62 cents a pound, and frozen pork bellies were 1.32 cents to a limit-down 2 cents lower, with February at 43.57 cents a pound.

Treasury bond futures went in the opposite direction at the Chicago Board of Trade, settling 1-22/32 to 1-23/32 higher, with December at 89-22/32.