COMMODITIES : Grain Futures Plunge on Report of Jump in Supplies

Prices for future deliveries of corn, oats and soybeans plunged their permitted daily limits Monday on the Chicago Board of Trade after a government report showed larger supplies of corn and soybeans than most experts had expected.

On other markets, energy futures surged, livestock and meat futures declined, copper was sharply higher, precious metals were mixed and stock index futures advanced.

Wheat settled 10.25 cents lower to 3 cents higher, with the contract for delivery in March at $4.3075 a bushel; corn was 10 cents lower across the board, with March at $2.7825 a bushel; oats were 9 cents to 10 cents lower, with March at $2.33 a bushel, and soybeans were 19 cents to 37 cents lower, with January at $7.6675 a bushel.

The Chicago Board of Trade limits corn and oat futures to daily moves of 10 cents a bushel, wheat to 20 cents a bushel and soybeans to 30 cents a bushel. The limit on the January soybean contract has been lifted pending the contract’s expiration.

Analysts said they had expected the sharp declines, especially in the corn market, in reaction to an Agriculture Department crop report released after the close of trading on Friday.

The report’s final 1988 U.S. corn production figure--4.92 billion bushels--was nearly 6% higher than the average estimate of market analysts and more than 5% above the USDA’s last projection, which it made in November.

The USDA pegged the nation’s corn stockpile as of Dec. 1 at 7.07 billion bushels, more than 6% higher than the average pre-report estimate.

The government’s numbers for soybean production and soybean stocks also were higher than expected.

The USDA’s wheat numbers were considered bullish but analysts said the corn and soybean markets pulled down wheat prices for near-month delivery.

The sharp drop in prices may force some corn producers to reconsider their strategies for the new growing season, said Cathy Leow, a grain market analyst with Thomson McKinnon Securities Inc. in New York.

She said corn’s recent rise to levels near $2.80 a bushel may have prompted some farmers to consider dropping out of the government’s price-support program, in which they agree to limit their corn acreage in return for a guaranteed selling price.

But now, she said, “I think a lot of them will think twice about dropping out of the program, given current price levels. It will affect planting decisions but we don’t know how much.”

Oil futures prices surged to their highest levels since November, 1987, pumped up by market speculation that OPEC nations would be able to keep a cap on their output.

Analysts said they did not expect the spike in prices to have much effect on prices of home heating oil and gasoline unless it lasted for a considerable period of time.

The February contract for West Texas Intermediate, the benchmark grade of U.S. crude oil, jumped 40 cents to settle at $18.88 a barrel on the New York Mercantile Exchange.

The last time the near-month contract settled higher was Nov. 20, 1987, amid hostilities in the Persian Gulf in the Iran-Iraq war. It settled that day at $18.93.

Although Persian Gulf troubles no longer are an issue, the price of the near-month contract for West Texas Intermediate has soared 50% since an intra-day low of $12.28 a barrel on Oct. 5.