Chicago | Reuters –– U.S. corn, soybeans and wheat futures rallied on Friday as investors used a sharp drop in the dollar as an excuse to cover short positions ahead of the weekend, traders said.
Investment funds had built up short positions in all three commodities at the beginning of the month as export demand for U.S. supplies waned and the dollar rallied to its highest in more than a decade.
But the dollar reversed course this week, undermined by expectations that U.S. interest rates will rise much more slowly than expected. The weakness provided a spark to the grain markets.
“Fundamentals are not that big of a deal at the moment,” said Ted Seifried, chief market strategist at Zaner Ag Hedge. “You get a drop in the dollar like this and you get a nice pop in the grains.”
Chicago Board of Trade corn for May delivery ended up 11-1/2 cents at $3.85 a bushel; CBOT May wheat was 18 cents higher at $5.30/bu. (all figures US$). The front-month corn and wheat contracts notched their biggest daily gains in percentage terms since Feb. 3.
CBOT May soybeans gained 12 cents, to $9.73-3/4 a bushel.
Wheat received additional support from concerns about dryness in the U.S. Plains hindering crop development.
“That market is putting some more weather premium into the price, aided by a sharp decline in the U.S. dollar index,” Brugler Marketing and Management said in a note to clients.
U.S. wheat plants have faced a lack of moisture plus severe cold spells this winter, despite some showers in recent days.
“The Plains revert to a drier pattern for the next 10 days, with only patchy relief from a few showers in the 11-to-15-day (outlook),” the Commodity Weather Group said in a daily update.
For the week, CBOT May wheat was up 5.6 per cent, the biggest weekly gain for the benchmark contract since mid-November. May soybeans were 0.2 per cent lower for the
week and May corn was up 1.2 per cent.
— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additionial reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.