September 10, 2007

 

US grains rally amid export hopes as dollar sinks

 

 

US corn and soy prices staged an unexpected rally on Friday (September 7) as a sharp drop in the dollar sparked hopes for stepped up exports and as investors bailed out of a sinking stock market in favour of grains.

 

High-flying wheat futures at the Chicago Board of Trade (CBOT), the world's largest grain exchange, rebounded from early losses as export demand stayed strong amid tight global supplies.

 

European Union wheat prices, however, were lower, weighed by a wave of profit taking after the market's rise to record highs earlier this week.

 

CBOT corn and soy futures fell at the open in keeping with trade expectations and the overnight trend, but bounced back.

 

December corn futures, which opened 3-1/4 cents lower, rose 5-3/4 cents to US$3.45 per bushel. November soybeans were down 1-1/2 cents at the open, rose 9-1/2 cents to US$9.02 per bushel. December wheat was up 5 cents at US$8.29.

 

Benchmark November milling wheat futures in Paris were down 6 euros or 2.19 percent at 267.50 a tonne, recovering from a fall of about 5 percent earlier in the day.

 

The dollar fell to a 15-year low against major currencies on Friday as government data showed US payrolls fell last month for the first time in four years, raising expectations for an interest-rate cut and fears of a recession.

 

The unexpectedly bleak report from the Labour Department showed non-farm jobs down by 4,000 drop. This drove the Dow Jones industrial average down by 176 points to 13,186.

 

The slide in the dollar's value helped to boost optimism for increased exports from the United States, the world's top exporter of corn, soybeans and wheat.

 

Export demand for US grains has been climbing due to weather-related production shortfalls of wheat in Europe, Canada and Australia. Some countries that use low-quality wheat to feed livestock are turning to corn and sorghum as fodder.

 

The US Department of Agriculture said exporters had reported the sale of 100,000 tonnes of US corn to South Korea for delivery in the current marketing year that began Sept. 1.

 

The USDA also announced the sale of 220,000 tonnes of wheat to unknown buyers.