Chicago | Reuters — U.S. grains and oilseeds fell more than one per cent on Friday, with soybeans tumbling to the lowest levels since October in a broad commodities selloff as the dollar rallied against a basket of global currencies.
Soybeans, corn and wheat each reversed earlier gains and fell to session lows as the dollar rode to session highs by midmorning, before another round of selling in the minutes before the close. Some investors also were liquidating holdings ahead of the three-day U.S. Memorial Day holiday weekend.
“Commodities in general are breaking, with the dollar index jumping to 96. That’s discouraging longs from getting into the market ahead of the long weekend,” said Mike Zuzolo, analyst at Global Commodity Analytics.
The dollar index rose to a three-week high after a U.S. inflation report bolstered the case for the U.S. Federal Reserve to raise interest rates to spur economic growth.
A strong U.S. currency makes less attractive U.S. grain supplies already struggling to compete in global markets with cheaper offerings out of South America, Europe and the Black Sea region.
Warmer temperatures forecast in the coming days in the U.S. Midwest crop belt also were seen as favourable for developing corn and soybean plants, even as heavy, drought-busting rainfall in the southern U.S. plains was expected to reduce quality and yields of hard red winter wheat.
CBOT July wheat finished 6-3/4 cents lower at $5.15-1/4 per bushel, easing after earlier failing to surpass Monday’s one-month high of $5.30-1/4 (all figures US$).
Several soybean contracts fell to lifetime lows, with most-active CBOT July soybean futures declining 14-1/4 cents to settle at $9.24-1/4 per bushel. On a continuous chart, soybeans were the lowest since Oct. 13.
CBOT July corn finished five cents lower at $3.60 per bushel. All three commodities fell more than one per cent for the week.
“Traders got tired of hearing about strikes and vessels running aground, and instead paid attention to great growing weather,” ED+F Man Capital analyst Charlie Sernatinger said of soybean decline.
CBOT July soymeal futures were up 10 cents to $304.20 per ton, lifted by the threat of a supply squeeze in Argentina, the world’s leading supplier of soymeal and soyoil.
Argentina’s largest labour union group will go ahead with a strike in the pivotal Rosario grains hub on June 1 if a salary dispute is not resolved.
— Michael Hirtzer reports on grain markets for Reuters from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Naveen Thukral in Singapore.