Rising US dollar forces down grain prices

 

 

Corn and soy fell from four- week highs, and wheat had the biggest drop in nearly two weeks due to pressure from the rising dollar and burgeoning global grain inventories.

 

The rising global grain stock is expected to curb demand from the US, while the stronger dollar will make US grain less competitive.

 

The US dollar gained as much as 1% against a basket of major currencies, eroding the appeal of US commodities. The dollar also jumped as much as 1.2% against the euro after EU finance ministers said they want guarantees Greece will reduce spending before they provide details on support for the Mediterranean nation.

 

Concerns that the Greek debt situation has not been solved are boosting the dollar, reducing the investment allure of commodities, said Greg Grow, director of agribusiness for Archer Financial Services in Chicago.

 

He said US corn and soy exports will slow as harvesting accelerates in Brazil and Argentina, the two biggest US rivals for exports of both crops.

 

Corn futures for May delivery fell 3.25 cents, or 0.9%, to US$3.7575 a bushel at 11:12 am on the CBOT. On Tuesday (Feb 16), the most-active contract rose 1.5% to US$3.805, the highest price since January 14.

 

Soy futures for May delivery dropped 9 cents, or 0.9% to US$9.655 a bushel in Chicago, snapping a four-day rally. On Tuesday, the most-active futures rose 2.1% to US$9.75, the highest since January 19.

 

Global wheat stockpiles will climb 19% to 195.9 million tonnes in the year ending May 31, the highest since 2002, according to the USDA. Wheat has declined 6% this year.

 

Wheat futures for May delivery fell 10.25 cents or 2% to US$5.0925 a bushel on the CBOT, the biggest drop for a most-active contract since February 3.

 

The US is the world's largest producer and exporter of corn and soy. Wheat is the fourth-largest US crop. The three crops are valued at a total of US$91.4 billion, according to government data.