Livestock and meat futures plummeted Tuesday on the Chicago Mercantile Exchange, reflecting traders' anticipation of a buyers' market at the retail level before the three-day Christmas weekend.
On other markets, energy futures advanced sharply, sending the precious metals higher; grains and soybeans were mixed and stock index futures retreated slightly.
Retail sales of meat are expected to fall off Thursday as families settle in to enjoy the long holiday weekend, said Charlie Richardson, an analyst in Denver with Lind-Waldock & Co.
That means grocers will buy relatively little beef and pork from wholesalers during the next four days, forcing the wholesalers to sell at the lower prices retailers are asking, Richardson said.
"If I'm a wholesaler, Christmas falls on the worst day of the year this year," he said.
On the other end of the chain, cattle marketings and hog slaughter levels have been relatively high this week, translating into fairly good supplies at a time of dropping demand, he said.
Hog futures also were pressured Tuesday by lower cash prices for ham as the holiday ham-buying crunch wound down, Richardson said.
Live cattle settled .75 cent to 1.25 cents lower with the contract for delivery in February at 60.32 cents a pound; feeder cattle were .55 cent to 1.38 cents lower with January at 73.57 cents a pound; live hogs were .30 cent to the limit 1.50 cents lower with February at 40.65 cents a pound; frozen pork bellies were .62 cent to 1 cent lower with February at 49.85 cents a pound.
Crude oil futures closed above $16 a barrel for the first time in a week on ideas that the market was oversold and indications that OPEC members may abide by production quotas established by the cartel, analysts said.
The rally on the New York Mercantile Exchange was based mainly on technical factors, said Chris McCormack, crude oil analyst in New York with E.D.& F. Man International Futures Inc.
"The market was grossly oversold for a while and we were due for a big shakeout here," he said.
Some Arab members of the Organization of Petroleum Exporting Countries said they would abide by production quotas stipulated in OPEC's recent agreement, suggesting that other cartel members may also show more restraint, McCormack said.
Most contracts closed up the limit allowed for daily trading, with the nearby contracts on which limits have been removed because of approaching expirations going even higher.
The American Petroleum Institute announced after the close that U.S. stocks of crude oil and distillates declined last week, while gasoline stocks increased.
West Texas Intermediate crude oil settled $1 to $1.21 higher with February at $16.61 a barrel, its highest level since Dec. 15; wholesale heating oil was 2 cents to 2.62 cents higher with January at 51.97 cents a gallon; wholesale unleaded gasoline was 2 cents to 2.88 cents higher with January at 44.16 cents a gallon.
Gold and silver futures advanced on the Commodity Exchange in New York following surging oil prices, said John Norris, chief metals trader in New York with Citibank.
Gold settled $4.30 to $4.40 higher with December at $483.90 an ounce; silver was .50 cent to 1.1 cents higher with December at $6.808 an ounce.
Grain and soybean futures ended mixed in light pre-holiday trading on the Chicago Board of Trade.
Corn futures advanced after falling in the past week. Soybeans retreated as expectations for new export business failed to materialize, said Pat O'Connell, a trader for Refco Inc.
Wheat was mostly lower in advance of Wednesday's weekly Agriculture Department wheat auction, O'Connell said.
Wheat settled 1 cent lower to .75 cent higher with March at $3.1925 a bushel; corn was unchanged to 3.25 cents higher with March at $1.89 a bushel; oats were 1.75 cents to 2.50 cents higher with March at $1.9350 a bushel; soybeans were unchanged to 3.50 cents lower with January at $5.99 a bushel.
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