U.S. grains: Wheat gains as dollar sags

Unwanted rains threaten U.S. Plains wheat yield potential, quality

Chicago | Reuters — U.S. wheat futures firmed on Wednesday, supported by a tumbling dollar and unwanted rains heading for the southern Plains growing area, analysts said.

Corn followed wheat higher while soybeans ended modestly lower, retreating from early gains.

Chicago Board of Trade July wheat settled up 2-3/4 cents at $4.27 per bushel, after trading as high as $4.32-1/4 (all figures US$). July corn finished up 3-3/4 cents at $3.71-1/2 a bushel while July soybeans fell 1/2 cent at $9.75-3/4 a bushel.

The dollar sagged, supporting grains, as investors fled risky assets amid uncertainty about U.S. President Donald Trump’s ability to deliver on tax and regulatory reform.

The dollar index, which had scaled a 14-year peak of 103.82 on Jan. 3, fell to 97.447, its lowest since the day after the Nov. 8 presidential election, and surrendered all of its “Trump bump” gains.

A weaker dollar tends to make U.S. grains more competitive globally.

“The wheat is correcting from its two-day loss, driven by the dollar plunge,” said Rich Feltes, vice-president for research with R.J. O’Brien. “And also, this heavy rain coming in the eastern Plains late in the week raises additional questions about the hard wheat quality.”

The Plains’ hard red winter wheat is maturing, and excessive moisture in recent weeks has threatened crop quality as well as yield potential.

Also supportive was news that Egypt’s main state wheat buyer purchased two cargoes of U.S. hard red winter wheat in an international tender along with cargoes from Romania, Ukraine and Russia. Egypt’s General Authority for Supply Commodities said it bought a total of 295,000 tonnes of wheat.

Soybeans turned mixed after the CBOT July contract set a one-week top on persistent export demand from top buyer China, coupled with a slow pace of farmer selling.

Analysts noted pressure on soybeans from a setback in the Brazilian real that could stimulate soy sales by Brazilian farmers. The currency eased after a six-session advance that had discouraged Brazilian growers from selling dollar-denominated soybeans.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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