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Cotton Futures Soar on Report of Record Consumption

September 23, 1987

Undated (AP) _ Cotton futures advanced the maximum allowed for a day’s trading on Wednesday, soaring on a government report that showed consumption hit record levels last month.

On other major markets, energy futures were higher; soybeans were higher while the grains were mixed; livestock futures were mixed; and precious metals were mixed.

Cotton futures settled up the 2-cent-a-pound limit on the contracts for December 1987 and March 1988 delivery as traders at the Coffee, Sugar and Cocoa Exchange in New York reacted to the U.S. Census Bureau’s monthly consumption report, analysts said.

The report estimated August consumption at a record 30,702 bales, compared to 27,020 a month earlier.

The report also showed that cotton stocks were down sharply, from about 8 million bales in July to 3.6 million in August.

″Based on that report, the market started to rally and opened strong,″ said Judy Weissman, an analyst in New York for Shearson Lehman Brothers.

Ms. Weissman said ″short-covering″ - or buying by traders who had previously sold in anticipation of lower prices - was a factor in trading on the October contract, which expires on Thursday.

″There has been concern about deliverable supplies against the October contract, and we saw last minute action ahead of (the expiration),″ she said.

The contract for October delivery settled at 76.23 cents a pound, up 1.86 cents from Tuesday’s close.

Heating oil led a rally in the energy futures on the New York Mercantile Exchange, prompted by an American Petroleum Institute report that traders viewed as bullish.

The report, issued late Tuesday, indicated a smaller seasonal increase in distillate stocks than had been expected, said Jim Ritterbusch, an analyst in Chicago with PaineWebber.

West Texas Intermediate crude oil settled 35 cents to 40 cents higher with November at $19.68 a barrel; heating oil was .92 cent to 1.19 cents higher with October at 53.23 cents a gallon; unleaded gasoline was .40 cent to .89 cent higher with October at 50.98 cents a gallon.

Soybeans rallied late in the session to lead soybean and grain futures to a mixed close on the Chicago Board of Trade.

The buying stemmed from rumors that the Soviet Union had purchased or would purchase a large amount of soybean meal from Argentina, said Victor Lespinasse, a trader for Dean Witter Reynolds Inc.

″That supported the meal market and helped rally the beans, and provided some support for corn,″ Lespinasse said.

Wheat prices slipped lower in the absence of news involving that grain, he said.

Wheat settled 3 1/2 cents to 4 1/4 cents lower with December at $2.92 1/2 a bushel; corn was unchanged to 1 cent higher with December at $1.76 1/2 a bushel; oats were 1/4 cent lower to 3/4 cent higher with December at $1.80 3/4 a bushel; soybeans were 2 cents to 3 1/2 cents higher with November at $5.29 a bushel.

Livestock and meat futures were mixed on the Chicago Mercantile Exchange in a day of subdued activity.

Analysts said consum October at 68.52 cents a pound; feeder cattle were .40 cent lower to .10 cent higher with September at 78.65 cents a pound; live hogs were .22 cent lower to .28 cent higher with October at 48.85 cents a pound; frozen pork bellies were .17 cent to .25 cent higher with February at 59.17 cents a pound.

Gold settled slightly lower and silver was higher in light to moderate trading on the Commodity Exchange in New York.

Gold was 10 cents to 20 cents lower with September at $462 a troy ounce; silver was 5.6 cents to 5.9 cents higher with September at $7.655 a troy ounce.

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