Grain Prices Post Slide, Coffee Takes A Dip

Grain prices fell sharply on Tuesday on excellent planting progress and crop growing weather in the Midwest. Coffee prices also fell as traders cashed in profits after recent 20-year highs.

In other markets, copper prices hit a one-year high amid supply worries and gold ended firm after the Federal Reserve left interest rates unchanged.

At the Chicago Board of Trade, corn for July delivery closed 8-1/4 cents a bushel lower at $2.76-1/4 and hit a three-month low.

"The markets are being dictated by weather," said Joel Karlin, vice president of commodities for brokerage house Everen Securities. "The crop is getting in the ground fast and, historically, crops yield better when they're planted early."

 

Weekly state crop reports issued late on Monday said 88 percent of the corn crop was seeded as of Sunday, ahead of five-year average pace of 67 percent. Soybeans for July delivery ended 21 cents a bushel lower at $8.45 and wheat for July delivery fell 14-1/2 cents to close at $3.80-1/2.

At the Coffee Sugar and Cocoa Exchange in New York, coffee prices fell for a third straight day as commodity fund investors continued to sell contracts bought on the runup to 20-year highs last week.

Coffee for July delivery closed at 240.25 cents a pound, down 6 cents. The May futures contract, which expired on Monday, rose to 280 cents last week, the highest price seen for coffee on the exchange since June 1977.

"The market reached an extremely overbought region and basically it just corrected," said Walt Spilka, a Smith Barney analyst. "It comes down now to the weather in Brazil and, outside of a frost in Brazil, everything else is discounted."

Spilka said warehouse stocks of coffee certified for delivery at the exchange has been rising for the past week, easing recent panic about roaster supplies. Maxwell House Coffee Co, a division of Philip Morris's Kraft Foods and the second largest US roaster, raised list price on its standard 13-ounce cans of ground coffees by 30 cents on Tuesday, following a similar hike Monday by Folgers.

Weather forecasts in top-grower Brazil now call for the country's coffee belt to escape frost damage this weekend. Traders also noted that the head of Colombia's National Coffee Growers Federation, Jorge Cardenas, said at a London meeting that he expected the coming 1998 Colombian crop to be a normal 12.2 million bags compared with 10.2 million bags in 1997.