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Wednesday, January 19, 2022

Wheat hits one-month high on dollar slide

Wheat hits one-month high on dollar slideSYDNEY/PARIS: US wheat hit a one-month peak on Thursday as a weaker dollar boosted the competitiveness of the world’s largest exporter.

Corn extended two-day gains to more than 2 percent, while soybeans rose 0.5 percent.

Chicago Board of Trade May wheat climbed 0.49 percent to $ 5.16-3/4 a bushel, after hitting a peak of $ 5.20 a bushel earlier in the session – the highest since Feb. 20. Wheat closed up 1.4 percent on Wednesday.

Traders said gains were driven by a weaker dollar, which suffered its biggest one-day fall in six years on Thursday after the Federal Reserve struck a dovish tone on interest rates while highlighting the currency’s drag on US exports.

“The fundamentals have not changed since the opening on Wednesday, macro buying drove gains yesterday and we are seeing some follow-through today,” said Brett Cooper, senior manager for markets at FCStone Australia.

A weaker dollar could help US exporters compete for global tenders, having seen big buyers shun US sellers as shipments remained uncompetitively priced.

Chinese buyers purchased about 450,000 tonnes of high protein wheat in the past few days, of which round 300,000 tonnes from Canada and about 150,000 tonnes from Australia, EU sources said.

The rise in US wheat prices could also favour EU exports.

“The European Commission and the USDA will be publishing new data on weekly wheat exports this afternoon. They will reveal to what extent the latest increase in the price of US wheat has caused demand to shift further towards EU wheat,” Commerzbank said in a note.

“If this has indeed been the case, the CBOT wheat price can be expected to shed some of its latest gains again,” it added.

May corn rose 1.25 percent to $ 3.84 a bushel, having gained 1 percent in the previous session.

Analysts said corn underpinned by strong demand for ethanol production.

US Energy Information Administration data showed increased ethanol production and decreased stocks of the biofuel, an indication of good demand for corn.

May soybeans rose 0.52 percent to $ 9.74-3/4 a bushel, just below their session-high of $ 9.80-1/4 a bushel – the strongest since March 13. Soybeans firmed 1.1 percent the session before.

Dim export prospects continue to hang over the market as corn and soybean harvests in Brazil and Argentina neared the halfway point.

Copyright Reuters, 2015

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