Oil, Grains, Meats Lead Commodities
Higher
12:34 a.m. Jan 07, 1999 Eastern
NEW YORK (Reuters) - Crude oil and petroleum
products led commodity prices higher Wednesday as
speculative fund investors who had sold futures
contracts in many markets stormed back to buy on
signs that weather and transport problems could stall
supplies.
Cold weather keyed several market rallies, with
heating oil surging on more forecasts for more
below-normal and frigid temperatures from the
Midwest to the Northeast.
Cattle and hog prices soared as winter storms
backed up marketings and threatened animal health,
while grain prices surged with higher demand from
livestock feeders due to the cold weather. Farmer
sales of grain were also snarled.
For the day, the Bridge Commodity Research Index
of futures prices ended 2.20 points or 1.1 percent
higher at 196.69, while the Goldman Sachs
Commodity Index, more heavily weighted in energy
values, surged 3.96 points or 2.96 percent to 137.54.
At the New York Mercantile Exchange, oil prices set
the pace for the day as professional commodity fund
investors jumped in to buy, following more cold
weather forecasts and a surprisingly big drop in U.S.
crude oil stockpiles last week.
Crude oil for February delivery closed 81 cents
higher at $12.80 a barrel, while February heating oil
ended 1.51 cents a gallon higher at 35.73 cents and
February gasoline closed 2.08 cents a gallon higher at
38.43 cents.
Private forecaster Weather Services Corp said
Wednesday that the Northeast, the largest U.S.
heating oil consuming region, would have
below-normal temperatures in the next six to 10 days.
But prices had already soared after Tuesday night's
weekly report on U.S. oil usage and stocks from the
American Petroleum Institute, an industry group.
The API said crude oil stocks had dropped a
whopping 14.9 million barrels in the week ended Jan.
1, compared with an average analysts' estimate of a
drop of 3.3 million barrels.
But some analysts were doubtful that the rally could
be sustained as they termed most of the year-end
drawdown on crude as inventory reductions for tax
purposes.
In Chicago, grain and livestock prices continued to
surge as the Midwest struggled with more snows and
freezing cold. The combination of weather effects has
slowed hog marketings and slaughter rates and
pushed cash meat prices higher as bacon slicers and
other processors scramble for raw materials.
At the Chicago Mercantile Exchange, both lean hog
and pork belly prices closed limit-up Wednesday as
strong buying from speculators joined in with
commercial demand.
February lean hogs ended up the 2.00-cent-a-pound
daily trading limit for the second straight day, closing
at 34.725 cents. February pork bellies closed up the
3.00-cent-a-pound limit at 47.050 cents.
Cattle and beef prices also felt the updraft from pork
markets, closing limit-up. February live cattle ended
1.50 cents a pound higher at 62.175 cents and
March feeder cattle closed 1.50 cents a pound higher
at 71.675 cents.
''Funds had been short for months and we turned on
a dime,'' said Art Paulsrud, a trader at ADM Investor
Services.
At the Chicago Board of Trade, corn prices set a
three-week high and wheat prices also surged as a
big government food aid tender drew near. March
corn closed 6-1/2 cents a bushel higher at $2.23-3/4.
''They were citing the cold weather stalling cash
movement and one can't argue with that. But the real
story is farmers have not been selling, market prices
are cheap and the market was short,'' said Prudential
Securities analyst Tom Levis.
March wheat closed 7-1/4 cents a bushel higher at
$2.87-1/2, with the Commodity Credit Corp.'s food
aid tender to buy 695,000 metric tons of wheat due
Thursday.
March soybeans closed 4-1/4 cents higher at
$5.53-1/2.
Silver was yet another market that rose on
speculative short covering of positions by fund
investors. COMEX March silver ended up 12.3
cents at $5.165 an ounce, after setting a six-week
high.
Copyright 1999 Reuters Limited. |
