COMMODITIES : Soybeans Jump as Hopes for Rain Fade

Soybean futures prices surged in late trading Wednesday as rain evaporated from weekend weather forecasts, but corn prices dipped and analysts said the drought-driven rally in that market was nearing its end.

Wheat and oat futures followed the soybean market in other trading on the Chicago Board of Trade.

On other markets, cotton and sugar posted strong gains; the tailspin continued for frozen pork bellies while livestock futures were mixed; energy and precious metals futures advanced, and stock index futures plummeted.

The grain and soybean markets opened quietly mixed then turned sharply lower in what analysts said was a response to a weekly Agriculture Department report showing less deterioration in the corn and soybean crops than some traders had expected.

But private midday weather forecasts reducing the chances for rain this weekend in the Midwest fueled a late soybean rally, and wheat and oat futures followed.

“Soybeans . . . staged a very, very strong comeback,” said Walter Spilka, a grains analyst with Smith Barney, Harris Upham & Co. in New York. “Traders basically looked at the private forecasts, which still say hot and dry as far out as they can see.”

The National Weather Service issued a 6- to 10-day outlook after the close predicting above normal temperatures and below normal rainfall in most major crop-growing areas for the middle and end of next week. That forecast was in sharp contrast to Monday’s 6- to 10-day outlook, which predicted above normal rainfall in the Midwest for the five days starting Sunday.

Corn futures finished slightly lower, possibly indicating that the bull market has peaked, said Cathy Leow, vice president of grain and soybean trading for Thomson McKinnon Securities Inc. in New York.

Wheat Futures Higher

With corn plants entering the pollination stage, a critical growth period in which silk and tassels appear, “we’re in the heart of causing damage and the weather forecasts are pretty horrible,” Leow said.

“The fact that the corn market has been unable to sustain strength in the face of these forecasts indicates to me that, if we haven’t seen the highs, we’re close to it,” she said.

Wheat settled 4 cents to 8.25 cents higher, with the contract for delivery in July at $3.935 a bushel; corn was 2.25 cents lower to 1 cent higher, with July at $3.42 a bushel; oats were 1 cent to 10 cents higher, with July at $3.23 a bushel, and soybeans were 0.03 cent to 25 cents higher, with July at $9.84 a bushel.

The soybean rally triggered buying of sugar and cotton futures, analysts said. Sugar for October delivery settled 1.17 cents higher at 13.99 cents a pound on New York’s Coffee Sugar & Cocoa Exchange. July cotton finished 1.80 cents higher at 66.80 cents a pound on the New York Cotton Exchange.

Frozen pork belly futures sank to new eight-year lows on the Chicago Mercantile Exchange amid a continuing lack of demand for the near-record glut of bellies in cold storage, analysts said. Most contracts plunged the daily limit of 2 cents a pound for the third consecutive session.

Hog futures were mixed in reaction to mixed cash markets. Cattle futures were pressured by a statement by National Cattlemen’s Assn. President Dale Humphrey that the drought would continue to cause liquidation of cattle herds, causing increased beef supplies in the near term, said Dale Durchholz, an analyst with AgriVisor Services Inc., an advisory service in Bloomington, Ill.

Live cattle were 0.17 cent to 0.88 cent lower, with August at 64.82 cents a pound; feeder cattle were 0.35 cent to 0.88 cent lower, with August at 74.37 cents a pound; hogs were 0.20 cent lower to 0.50 cent higher, with July at 44.57 cents a pound; frozen pork bellies were 0.85 cent to 2 cents lower, with July at 32.40 cents a pound.

Oil Prices Rise

Energy futures advanced on mostly technical factors on the New York Mercantile Exchange.

The weekly American Petroleum Institute report, issued after the close, indicated continued strong demand for unleaded gasoline, which should support futures prices today, said Peter Beutel, energy analyst with Elders Futures Inc. in New York.

West Texas Intermediate crude oil settled 25 cents to 33 cents higher, with August at $15.36 a barrel; heating oil was 0.86 cent to 1.06 cents higher, with August at 42.61 cents a gallon, and unleaded gasoline was 0.60 cent to 0.87 cent higher, with August at 50.50 cents a gallon.

Precious metals gained slightly in thin trading on the Commodity Exchange in New York in reaction to the higher oil and soybean prices, analysts said.

Gold was 40 cents to $1.10 higher, with August at $440.70 an ounce; silver was 5 cents to 5.7 cents higher, with July at $6.819 an ounce.

Stock index futures plummeted in a late flurry of program trading linked to falling Treasury bond prices, analysts said. The contract for September delivery of the Standard & Poor’s 500 index settled 6.65 points lower at 272 on the Chicago Mercantile Exchange.

Tables, Page 14