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New orders buoy wheat
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September 24, 1998: 6:21 p.m. ET
Battered by tough competition and low demand, grain gets a lift on Jordan buy
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NEW YORK (CNNfn) - Wheat prices climbed Thursday as new international orders livened up a sour market burdened by stiff competition from overseas producers.
The Chicago Board of Trade red winter wheat futures contract for December delivery rose 4-1/2 cents to $2.7875 a pound, after hitting a mid-session high of $2.80.
The Kingdom of Jordan made orders Thursday for 100,000 tons of U.S. red winter wheat, on top of a tender announcement from Pakistan for 500,000 tons. That firmed up a market battered in recent months.
"I think what we are doing is trying to find a support level after all the recent weakness in the market," said Randy Mittelstaedt, a grains analyst with Merrill Lynch in Chicago. "It was the first time in quite some time."
"But continuing that is going to be pretty difficult, the export market is going to be tough over the next year," he added.
That's because wheat growers in Europe are coming off a record crop, and Australia seems poised for a near-record year. That while Asia demand has virtually dried up amid economic turbulence ravaging the region.
According to recent data from the U.S. Department of Agriculture, total purchase commitments so far in the 1998-99 marketing year are running at the second-lowest level in 15 years.
"Any business done in this environment is friendly to the market, given the big picture," said Mittelstaedt.
Gold finds reason to shine
Gold futures bounced to their highest levels in nearly two weeks Thursday amid circulating rumors that a key hedge fund had bet against the metal.
The Comex gold futures contract for December delivery jumped $3.90 to settle at $296.40 a troy ounce, the highest the contract has been since Sept. 11.
Gold prices got a lift as speculation turned about whether hedge fund Long-Term Capital Management had a big short position, or a bet that prices will fall, in gold futures that it would need to cover by buying up the metal.
"If it was a huge one, we would have seen it - they would have had to buy it through several houses," said Kempf. "If you're going to sell a large position of gold, people would see you coming and that can hurt you."
"There is no doubt that the market moved based on this rumor," said Ted Kempf, metals analyst with CPM Group. "The whole market is talking about this."
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