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Cotton, grain prices

fall ahead of

crop estimates

NEW YORK: Cotton and grain prices fell sharply Thursday as traders awaited the latest estimates by the Agriculture Department of the current expected crop.

December cotton closed 0.35 cent a pound lower at 71.25 cents on the New York Cotton Exchange. Cotton prices rose over $1 a pound earlier this year for the first time in a century on worries about tight world supplies. But that was before the U.S. crop was planted.

After the market closed, the department pegged production at 21.81 million 480-pound bales, compared with 19.66 million bales grown last year. Analysts had estimated 20.6 million to 22.6 million bales.

"There was a high buildup for it but generally there were no surprises at all," said Ed Jernigan at Jernigan Group/Dean Witter. "It was in the mid-range of expectations."

Other analysts expect further pressure from the current crop. Frank Schneider and Co. analyst Sharon Johnson said the report would be neutral to slightly negative for cotton prices, especially since the department also raised its estimates for world and U.S. cotton stocks at the end of the season next July. "It keeps the bearish sentiment," she said.

The government will release its latest estimates for corn, soybeans, wheat and rice crops Friday morning.

Speculators, who have poured into the markets this summer as searing heat and crop problems hit the Midwest, continued to cash their profits ahead of the estimates.

September wheat at the Chicago Board of Trade closed 4-1/2 cents a bushel lower at $4.29-3/4 and September corn fell one cent at $2.77-1/4. September rough rice fell seven cents per hundred pounds to $7.98 and September soybeans lost 1/4 cent a bushel to $5.89-3/4.

"People didn't want to do much before the report. There was just a little evening up before the close," said Ron Kucha of O'Connor and Co.

Continuing strong export sales of corn should keep the market sentiment strong. China bought another 600,000 metric tons of corn Thursday to total sales of 1.2 million tons in the last week. South Korea and Egypt were other big buyers.

Crude oil prices closed higher at the New York Mercantile Exchange, led by strong gasoline demand.

"Majors with retail operations were buying conventional gasoline in the cash market, which suggests demand is holding up three or four weeks out," Chase Manhattan vice president Anthony Lerner said, adding that stocks fell again this week.

September gasoline rose 0.87 cent at 55.65 cents a gallon on NYMEX, September heating oil added 0.10 cent to end at 49.55 cents a gallon and September crude rose 11 cents to $17.89 a barrel.-Reuter