Weather developments drive oil higher, corn lower
By MADLEN READ, AP Business Writer
Tuesday, August 26, 2008 5:40 PM CDT
NEW YORK 8/25/08 - Corn prices turned lower on Monday, giving up earlier gains as forecasts arrived for much-needed rain in the Midwest.
Energy prices rebounded after Friday’s massive pullback, however, as Tropical Storm Gustav developed in the Caribbean.
Earlier this year, torrential rains flooded the Midwest and threatened the U.S. corn crop. Some respite in the way of warm, dry weather eventually arrived - but now, corn is in need of some moisture again.
“We’re absolutely, 100 percent, in a weather-driven market right now,” said Jason Ward, analyst with Northstar Commodity in Minneapolis. For corn, “it’s getting to be a critical timeframe. Any rain past Sept. 10 won’t help the corn anymore. It’ll be too late at that point.”
Weather forecaster World Weather Inc. said midday Monday the U.S. Global Forecast System model was predicting significant rain in the northwestern corn belt.
Meanwhile, a report showing an increasing crop size in Russia weighed on the price of wheat, as did higher chances of rain in Australia, Ward said.
Wheat for September delivery fell 25.25 cents to finish at $8.4025 a bushel and December corn fell 6.5 cents to end at $6.00 a bushel. November soybeans, however, rose 20 cents to settle at $13.47 a bushel.
Energy prices rose after Tropical Storm Gustav formed in the Caribbean, leading traders to bet that the storm could disrupt oil and natural gas production in the Gulf of Mexico. The storm was headed for the Dominican Republic and Haiti with maximum sustained winds of near 60 mph.
Light, sweet crude for October delivery rose 52 cents to settle at $115.11 a barrel, after tumbling more than $6 a barrel on Friday on the New York Mercantile Exchange. That drop was crude’s largest daily price drop, percentage-wise, since Dec. 27, 2004, and the biggest in dollar terms since Jan. 17, 1991.
Other energy futures also bounced higher on the Nymex. Heating oil futures rose 2.57 cents to settle at $3.1568 a gallon, while gasoline prices rose 1.59 cents to settle at $2.8845 a gallon. Natural gas futures fell 3.3 cents to close at $7.81 per 1,000 cubic feet.
Meanwhile, precious metals slipped as the U.S. dollar edged higher against the euro. The dollar’s recent bounce versus major currencies has been diminishing traders’ tendency to use precious metals and other commodities as a hedge against inflation.
Gold futures for December delivery fell $7.80 to finish at $825.70 an ounce on the New York Mercantile Exchange, after rising 5.2 percent last week.
Silver futures for September delivery fell 10.7 cents to end at $13.37 an ounce on the New York Mercantile Exchange, after rising 5.1 percent last week.
Copper, however, gained modestly as a report showed that U.S. sales of existing homes in July rose by more than the market expected. September futures for the industrial metal rose 0.9 cent to close at $3.4815 an ounce on the New York Mercantile Exchange, building on last week’s advance of 5.1 percent.
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