COMMODITIES : Rain Forecast Pushes Soybean Prices Lower

Soybean futures prices plunged Tuesday on the Chicago Board of Trade as a rain forecast diluted drought fears, but corn prices advanced on speculation that the moisture would come too late to prevent heavy damage to the corn crop.

Dave Armstrong, a grain analyst with Agrivisor Services Inc. in Bloomington, Ill., said many traders were also unnerved by the extreme volatility in the soybean market. He noted that the initial cost of buying a contract has been raised recently because of the volatility, also discouraging new buyers.

The volatility is unlikely to ease any time soon, because professional forecasters differ in their outlook, he said.

“There is a difference of opinion. That’s certainly not a unanimous forecast that there will be above average rain anytime soon,” he said.

Armstrong also noted that the corn crop has suffered severe damage from the drought and even if rain does emerge next week, the crop has been reduced significantly.

“They showed that they’re really in pollination and really hurting. It shows how serious corn is,” Armstrong said. He said the forecast was more significant for soybeans than for corn because the soybeans are better able to withstand the stress from the drought.

The crop could recover and still produce a respectable harvest with sufficient rain, other analysts said.

Wheat and oats futures prices followed the soybean market, which saw some contracts plummet the 30-cents-a-bushel limit for daily trading.

Wheat settled 8.5 cents to 11.5 cents lower, with the contract for delivery in July at $3.89 a bushel; corn was 2 cents to 4.25 cents higher, with July at $3.44 a bushel; oats were unchanged to the limit 15 cents lower, with July at $3.22 a bushel, and soybeans were 12 cents to 30 cents lower, with July at $9.59 a bushel.

The drop in grain prices, combined with a demand-driven rise in cash cattle prices, gave most cattle futures a healthy boost on the Chicago Mercantile Exchange.

Live cattle settled 0.53 cent lower to 1.10 cents higher, with August at 65.70 cents a pound; feeder cattle were 0.78 cent to 1.45 cents higher, with August at 75.12 cents a pound; hogs were 0.97 cent lower to 0.58 cent higher, with July at 44.07 cents a pound, and frozen pork bellies were 1.90 cents to 2 cents lower, with July at 33.25 cents a pound.

Oil futures rallied on the New York Mercantile Exchange, but the market registered little reaction to the downing of an Iranian passenger jetliner by a U.S. Navy ship in the Persian Gulf, analysts said.

West Texas Intermediate crude oil settled 12 cents to 16 cents higher, with August at $15.09 a barrel; heating oil was 0.54 cent to 0.60 cent higher, with August at 41.59 cents a gallon, and unleaded gasoline was 0.85 cent to 1.37 cents higher, with August at 49.72 cents a gallon.

On New York’s Commodity Exchange, gold settled 70 cents to $1.20 higher, with August at $440.30 an ounce; silver was 6 cents to 6.6 cents higher, with July at $6.766 an ounce.

Stock index futures posted strong gains on the Chicago Mercantile Exchange, where the contract for September delivery of the Standard & Poor’s 500 index settled 5.75 points higher at 278.65.

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