Prices of corn futures plunged Tuesday for the second straight day on the Chicago Board of Trade amid rumors of export cancellations in a market already weakened by the government’s report of larger-than-expected supplies.
Soybean futures also fell sharply, while wheat and oat futures finished mostly higher.
On other other markets, precious metals advanced, livestock and meat futures were mostly higher and stock index futures retreated.
Wheat settled 2 to 6 cents higher, with the contract for delivery in March at $4.3675 a bushel; corn was 2 to 10.50 cents lower, with March at $2.6775 a bushel; oats were unchanged to 2.50 cents higher, with March at $2.33 a bushel, and soybeans were 14.50 cents lower to 1 cent higher, with March at $7.7075 a bushel.
Rumors that port congestion may force the Soviet Union to cancel some of its purchases of U.S. corn, soybeans or soybean meal weighed on the futures markets for those commodities, analysts said.
Under a long-term grain agreement with the United States, the Soviet Union has so far agreed to purchase more than 10 million tons of U.S. corn, 1.1 million tons of soybean meal, 450,000 tons of U.S. soybeans and 370,000 tons of U.S. wheat for 1988-89 delivery.
The rumors had the greatest impact in the corn pit, where intra-day losses approached the 15-cents-a-bushel limit. The board of trade expanded the daily trading limit for corn from 10 cents a bushel after limit declines on Monday.
Analysts said the rumors surfaced just as the corn and soybean markets appeared to be recovering from Monday’s collapse, which was linked to an Agriculture Department crop report released Friday that indicated supplies of U.S. corn and soybeans were larger than most market experts had expected.
“When people started talking about net cancellations of U.S. sales by the Russians, that brought in a pretty bearish attitude right up until the close,” said Steven Freed, a grain market analyst with Dean Witter Reynolds in Chicago.
Additional selling of soybean futures was prompted by reports of improved growing conditions in Brazil and Argentina, where a spate of hot, dry weather got the South American soybean crop off to a bad start, analysts said.
A late rally brought corn and soybean futures off their lows of the day. But corn for near-month delivery still closed at its lowest point since Dec. 20 and January soybeans finished at $7.6175, their lowest price since Dec. 5.
“The market is searching for support now following the liquidation as a result of the crop report,” said Ted Mao, an analyst with Shearson Lehman Hutton.
Freed predicted that corn prices would stabilize after Tuesday’s selloff. “The market will go to wherever the demand price is,” he said. Contracts for deferred deliveries of unleaded gasoline soared the 2-cent-a-gallon daily limit on the New York Mercantile Exchange, on speculation that new pollution-control standards taking effect this year in several Northeastern states will raise the price of gasoline production, analysts said.
The new regulations in states including Massachusetts and New York create a more stringent standard for a characteristic of gasoline that is related to automobile exhaust emissions, said Andrew Lebow, an analyst with E. D. & F. Man International Futures Inc. in New York.
Gold and silver futures advanced on New York’s Commodity Exchange, reflecting the U.S. dollar’s weakness against major currencies.
Gold settled 70 to 80 cents higher, with February at $404 an ounce; silver was 5.3 to 5.4 cents higher, with March at $6.01 an ounce.
On the Chicago Mercantile Exchange, live cattle settled unchanged to 0.30 cent higher, with February at 74.35 cents a pound. Feeder cattle were 0.10 to 0.40 cent higher, with January at 85 cents a pound; live hogs were 0.15 cent lower to 0.22 cent higher, with February at 44.92 cents a pound, and frozen pork bellies were 0.25 cent lower to 0.23 cent higher, with February at 42.25 cents a pound.
Stock index futures retreated slightly on the Chicago Mercantile Exchange, where the contract for March delivery of stocks represented by the Standard & Poor’s 500 index settled 0.60 point lower at 286.10. The contract is worth $500 a point.