U.S. grains: Wheat sinks as dollar rises

(Lisa Guenther photo)

Chicago | Reuters — U.S. wheat futures plunged more than one per cent on Thursday to a four-year low on fears that a rising dollar could hamper global demand for U.S. exports as global supplies rise to a record high.

Corn and soybeans dropped about one per cent on spillover pressure from sinking wheat and on rising supplies from the rapidly advancing harvest of record crops.

“Even with the harvest pressure from corn and beans and a wide-open harvest window, the wheat decline is leading the market lower,” said Global Commodity Analytics president Mike Zuzolo. “This goes right over into the currency pits and the dollar making new highs after really good jobless claims data.”

The U.S. dollar hit a four-year high against a basket of currencies on Thursday on expectations of higher U.S. interest rates.

The International Grains Council raised its forecast for the 2014-15 global wheat crop by four million tonnes to a record 717 million tonnes, largely due to an improved outlook in the European Union and Ukraine.

Chicago Board of Trade December wheat fell 6-1/4 cents, or 1.3 per cent, to $4.74 a bushel after gaining 0.9 per cent on Wednesday (all figures US$). The front-month contract had hit a four-year low of $4.66-1/4 earlier in the session.

December corn shed 3-1/2 cents, or 1.1 per cent, to $3.26 a bushel, hovering just above a four-year low of $3.24-3/4 posted earlier in the week.

November soybeans dropped 14 cents, or 1.5 per cent, to $9.22-3/4 a bushel, the lowest level for a front-month contract since March 2010.

Commodity funds sold an estimated net 4,000 corn contracts, 7,000 soybean contracts and 3,000 wheat contracts on the day, trade sources said.

“The sheer weight of the crop is still hanging over our head,” said grain analyst Roy Huckabay of the Linn Group.

Weekly soybean export sales data released by the U.S. Agriculture Department on Thursday was near the high end of a range of trade estimates at 2.566 million tonnes, mostly to top importer China. But the market had absorbed most of that news last week when USDA confirmed large Chinese purchases via a its daily reporting system.

Corn and wheat export sales were also within the range of trade expectations.

USDA also reported fresh sales of 115,000 tonnes of U.S. soybeans to China and 120,000 tonnes of hard red winter wheat to Nigeria.

Some investors were beginning to square positions ahead of the USDA’s quarterly stocks and small grains summary reports on Sept. 30.

— Karl Plume reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago, Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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