U.S. grains: Lower greenback sparks rally in wheat, corn, soy

Chicago | Reuters –– U.S. corn, soybean and wheat futures rallied on Tuesday, supported by a steep decline in the U.S. dollar that made all three commodities more attractive to investors looking for a hedge against inflation, traders said.

Wheat notched the biggest gain, with the front-month Chicago Board of Trade (CBOT) contract surging 3.8 per cent as traders used the dollar drop as a prompt to unwind bearish bets they had made on the grain amid an abundance of global supplies. The plentiful stocks situation worldwide has chilled export demand for U.S. offerings.

The jump in wheat lent support to corn prices, which had hit their lowest in more than seven months on Monday, while soybeans benefited from a slowdown in the pace of planting around the U.S. Midwest.

“For a change, everything is going our way,” said William Fordham, president of C+S Grain Market Consulting.

CBOT July soft red winter wheat futures settled up 18-3/4 cents at $5.12-1/2 a bushel while CBOT July corn gained 6-3/4 cents to close at $3.59 a bushel (all figures US$).

Wheat futures received additional support from concerns about damage to crops being grown in the U.S. Plains. Recent flooding in southern areas sparked fears of lower quality in hard red winter wheat while a cold snap threatened to cut yields of spring wheat in northern areas.

K.C. hard red winter wheat futures rose 4.3 per cent, while MGEX spring wheat gained 4.2 per cent.

“The question remains as to whether or not the losses of production are enough to put a material dent in heavyish U.S. wheat balances,” said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia, in a note to clients.

CBOT July soybean futures settled up 14-3/4 cents at $9.40-3/4 a bushel.

The U.S. Agriculture Department on Monday afternoon said soybean planting progress advanced just 10 percentage points to 71 per cent complete in the week ended Sunday, behind analysts’ forecasts and just one percentage point ahead of the five-year average.

“Things are good out here but they are not perfect,” Fordham said. “It is time (for the market bears) to take a breather.”

Traders also cited gains in soymeal, which rose 1.6 per cent on improving demand and tight cash market supplies, as supportive to soybeans.

The U.S. dollar was on track to post its biggest one-day loss against the euro since mid-March on expectations that Greece would reach a deal with its creditors.

— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.