October 14, 2010

Soy, corn and wheat futures lift on weakening dollar

Soy, corn and wheat futures advanced as the dollar weakened, making US supplies more attractive to importers and investors.

Soy for November delivery, the contract with the biggest volume, gained as much as 1.5% to US$11.945 a bushel. Corn for December delivery rose 1.1% to US$5.755 a bushel and wheat climbed 0.9% to US$7.09 a bushel.

The Dollar Index, a six-currency gauge of the greenback's value, fell for a third day on speculation the Federal Reserve will ease monetary policy further to stimulate economic growth.

US farm exports may surpass a 2008 record of US$115.3 billion on surging corn, soy and wheat prices, said Joe Glauber, the Department of Agriculture's chief economist.

A slumping dollar makes raw materials priced in that currency cheaper in terms of other monies, and also spurs demand for commodities as alternative investments.

US exporters sold 297,500 tonnes of soy to China, the world's biggest consumer, for delivery in the marketing year that began September 1, according to the USDA. As of September 30, US exporters had outstanding soy sales to China of 12.47 million tonnes, it added.

"This continued purchase of soy by the Chinese remains a supportive influence," analysts said.

The US government Wednesday (Oct 13) agreed to let refiners add as much as 15% ethanol to gasoline used for 2007-model cars and light trucks or newer, raising the blend from 10%. Ethanol accounts for about 30% of corn use in the US, according to the Washington-based Renewable Fuels Association.