U.S. grains: Prices jump on weak dollar, Ukraine unrest

Chicago | Reuters — U.S. grain and soybean futures jumped Friday as the U.S. dollar weakened and political unrest in Ukraine raised concerns about potential trade disruptions.

The markets rebounded after wheat approached a three-week low on Thursday. Export demand helped lift corn and soybeans, which also dropped on Thursday.

Grain traders kept an eye on Ukraine, one of the world’s large wheat and corn exporters, as the country’s new leadership accused Russia of open aggression.

“When we look down the road to new crop, the possibility of geopolitical tensions spiralling out of control and disrupting trade is a factor,” said Austin Damiani, a broker for Frontier Futures in Minneapolis. “I think there are some people looking at that and wanting to put some risk premium in, in case that happens and the situation unravels.”

March wheat climbed 16-3/4 cents to $5.99 a bushel at the Chicago Board of Trade, above the almost three-week low of $5.81-1/2 hit during a three per cent slide on Thursday (all figures US$). March corn rose 9-1/2 cents to $4.57-1/2.

Political upheaval in Ukraine “is a concern because the tensions continue to evolve, and the outcome is uncertain,” said Shawn McCambridge, analyst for Jefferies Bache.

“So far, we have not seen any easing as far as export shipments, and the new government certainly needs the export shipments to continue to go out to generate hard currency,” he said.

Weakness in the dollar and export demand helped support prices, traders said.

Private exporters struck deals to sell 101,600 tonnes of U.S. corn to unknown destinations for shipment during the 2013-14 marketing year, according to the U.S. Department of Agriculture.

Egypt bought 120,000 tonnes of optional-origin soybeans for 2014-15, meaning the cargoes could be from the United States or from one or more other countries. The 2013-14 U.S. corn and soybean marketing year started on Sept. 1.

Soybeans’ wild ride

March soybeans soared 20-3/4 cents to $14.14-1/4 in another volatile trading session.

On Thursday, March soybeans had a dramatic 60-cent per bushel trading range, rising as much as two per cent to a five-month high of $14.52-1/4 before settling one per cent lower.

A rally in soybeans this month has been propelled by adverse weather in Brazil that threatened to lower production prospects and slow harvesting, extending the export window for dwindling U.S. supplies.

Brazilian analyst Safras + Mercado on Friday cut its soybean forecast for the country by 6.2 per cent to 86.1 million tonnes due to drought in January and early February.

However, the impact of poor weather on soy crops in South America is diminishing as harvests draw nearer in many areas, Gerlach said. As a result, traders are increasingly “starting to turn the page” to focus on weather conditions for U.S. planting, he said.

Commodity funds bought an estimated 10,000 soybean contracts, 12,000 corn contracts and 5,000 wheat contracts, traders said.

— Tom Polansek reports on ag futures markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore.

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