Corn, soy, cotton up on weather, oil on Nigeria
06:10 p.m Jul 08, 1998 Eastern
CHICAGO, July 8 (Reuters) - Concern that a heat wave scorching the
southern United States would threaten the Corn Belt pushed corn and
soybean prices higher for a second day on Wednesday.
In other markets, cotton rose to a fresh two-year high on the weather
worries. Oil closed higher on concern about political stability in
Nigeria, a top exporter, while gold ended slightly lower on news that
Europe's new central bank would hold a smaller than expected amount of
gold in its official reserves.
At the Chicago Board of Trade, soybeans for August delivery closed 5-1/4
cents a bushel higher at $6.47 and corn for September delivery rose
2-3/4 cents to $2.49.
Nervousness about the weather was tied to forecasts for a heat-producing
high-pressure ridge to expand into the U.S. Midwest next week.
Temperatures in some areas were projected at 100 degrees Fahrenheit (38
Celsius), raising the potential for crop damage and lower yields as corn
enters the crucial pollination stage.
''The high-pressure ridge looks stronger,'' said Mario Balletto, an
oilseed analyst with Merrill Lynch in Chicago. ''And there's a fear that
it may last longer.''
Jon Davis, chief meteorologist for Salomon Smith Barney Inc., said, ''If
everything does evolve next week as is indicated this morning, it could
persist for an extended period of time.''
Prices surged from the opening bell, but increased farmer sales of corn
and soybeans during the day helped pull the markets well off their highs
by the close, traders said.
That retracement also weighed on wheat prices, which gave up early gains
and closed lower.
Wheat for September delivery in Chicago closed 2-3/4 cents a bushel
lower at $2.82-1/2, with huge world supplies and weaker Asian demand
continuing to put a damper on any rally.
Cotton prices closed mixed, although traders continued to evaluate what
appears to be widespread damage to the crop in non-irrigated areas of
drought-ridden Texas, the top producer state.
More heat forecast for Mississippi Delta cotton states such as Arkansas
was also a factor supporting prices on Wednesday.
''That's the main piece of support there,'' said Joe Carney, commodity
broker for STA Trading Services in Memphis.
Cotton for July delivery at the New York Cotton Exchange closed 0.39
cent a pound higher at 83.19 cents, the highest close since May 1996.
Oil prices rose on jitters about stability in Nigeria. Crude oil for
August delivery at the New York Mercantile Exchange closed 23 cents
higher at $13.85 a barrel.
In Nigeria, military ruler General Abdulsalam Abubakar appealed for calm
after about 20 people died in rioting that followed the announcement of
opposition politician Moshood Abiola's sudden death on Tuesday.
But Abubakar, in a speech on Nigerian television, did not mention any
plan to free other political prisoners or any concrete measures to
restore democracy.
Nigeria, Africa's most populous nation, produces more than two million
barrels of oil daily, a large part of which is sold to the United
States. Early Wednesday, officials at multinational oil firms working in
Nigeria said the unrest had no immediate effect on crude oil production.
But Nigerian output was affected for short periods during strikes and
protests in 1994 after Abiola was arrested by the army for having
declared himself president. Many Nigerians believe he won the 1993
elections.
August heating oil rose 0.22 cent a gallon to 37.82 cents, but August
gasoline fell 0.13 cent a gallon to 46.79 cents.
Gold prices fell slightly after the new European Central Bank, or ECB,
said it would hold 15 percent of its reserves in gold bullion, a figure
on the low end of analysts' estimates.
August gold at the COMEX in New York fell $1.70 an ounce to close at
$294.20.
But some analysts said the ECB's additional decision to take control of
foreign reserve asset operations of European Union national banks could
help gold prices in the long run.
''What this means is that there is much less chance in future of
unilateral action to sell gold by individual European central banks,''
said Charles von Arentschildt, Deutsche Bank's New York managing
director for bullion sales.
''In future the larger European central banks, which have greater voting
power in the ECB, will have a greater say in gold sales, and that means
gold sales are less likely, as they will be more politically
problematic,'' he said.
Copyright 1998 Reuters Limited. |
