U.S. grains: Wheat falls to 5-1/2 year low on rising dollar

Chicago | Reuters — U.S. grains fell on Wednesday, with wheat prices hitting the lowest levels since June 2010 as a rising dollar made the cereals less attractive in global markets, traders said.

Wheat now has declined six sessions in a row, shedding more than eight per cent in the worst such skid since July while corn fell after hitting a three-week peak on Tuesday. Soybean futures were slightly higher, hovering near a roughly one-month high.

Chicago Board of Trade wheat for March delivery settled 4-1/4 cents lower at $4.67-1/4 per bushel, just above its lifetime low of $4.65-1/2 reached earlier in the session (all figures US$).

The dollar hit a 12-year high against a basket of currencies, helping to expand the competitive disadvantage for U.S. wheat and corn, which are already more expensive than supplies shipped out of the Black Sea and South America.

“The stronger dollar continues to weigh on feed grains,” EFG Group analyst Tom Fritz said. “Corn is also reeling from the weaker energy markets. We tried to rally the corn on EPA boosting demand for ethanol, but a lot of people don’t see gasoline demand giving corn a boost.”

The U.S. Environmental Protection Agency on Monday slightly increased its blending requirements for grain-based ethanol into the domestic fuel supply, implying increased corn demand. However, ample global oil supplies pressured crude oil, gasoline and ethanol futures.

Weekly U.S. data also showed ethanol production last week fell sharply from the record-large rates of the previous week.

Argentina’s farmers are racing to plant more corn now that a new farm-friendly government is taking power, increasing the area planted by 10 percent over previous estimates, and making more exports likely from one of the world’s biggest suppliers.

Feed mills in Malaysia, Vietnam and Indonesia were said to be delaying corn purchases on expectations of cheaper offerings out of Argentina. President-elect Mauricio Macri has promised to abolish Argentina’s export taxes on corn and wheat and reduce export taxes on soybeans.

Most-active CBOT March corn was down 3-1/2 cents at $3.70-1/4 per bushel, declining after rising the first two days this week.

Soybeans for January delivery were up 3 cents at $8.92-1/4 per bushel, rising from the more than six-year lows reached in mid-November.

“Soybeans are recovering as prices had fallen too low,” said Ole Houe, an analyst at brokerage IKON Commodities in Sydney. “It could be building up to a rally as funds are near record short in beans.”

Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Naveen Thukral in Singapore.

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