While an East Coast snowstorm shut down trading on New York's commodities exchanges, grain and lumber prices plummeted Monday in Chicago.
The grain markets reacted to continued rainfall in South America that has relieved the hot and dry weather that parched crops in Brazil's and Argentina's grain and soybean belts.
An initial price decline touched off a selling frenzy in the grain pits at the Chicago Board of Trade, where large commodity funds unloaded millions of bushels' worth of contracts bought previously during the market's yearlong rally.
Soybean prices recently climbed to six-year highs because of the anticipated damage to Brazil's soybean crop, the world's second-largest after the United States', and because the 1995 U.S. harvest was significantly smaller than a year earlier.
"It was all based on improved weather in South America," said Vic Lespinasse of Dean Witter Reynolds of the selling in Chicago. "Tomorrow we'll see what the weather looks like in South America and that will determine what we do then."
January soybeans dropped 17.25 cents to $7.27 1/2 a bushel, and March corn lost 6 cents to $3.60 1/2. Commodity funds have probably ridden the grain markets up in the last year, with corn at 12-year highs and wheat at 20-year highs.
Wheat prices declined near an important technical support level at $4.83. March wheat fell 10 cents to $4.83 1/2 a bushel.
Meanwhile, the New York commodities exchanges failed to open because of the East Coast snowstorm, which was expected to shut down construction firms and other users of wood for some time, driving down already weak lumber prices at the Chicago Mercantile Exchange.
Most-active March lumber fell $9 to $273 per 1,000 board feet.
The fall in grain prices boosted the depressed market for feeder cattle, which recently struck 10-year lows. The soaring price of corn has lifted the cost of feeding and fattening animals and dropped the price of young cattle.
February live cattle prices sank 0.15 cent to 66.27 1/2 cents a pound, and March feeder cattle rose 0.67 1/2 cent to 59.12 1/2 cents a pound. February hogs declined 0.15 cent to 45.77 1/2 cents a pound, but February pork bellies firmed 0.42 1/2 cent to 55.02 1/2 cents.