US Wheat Review on Wednesday: CBOT posts gain thanks to slumping dollar

 

 

Wheat futures on the Chicago Board of Trade rose for the first day in six as the slumping U.S. dollar stirred prospects for improved export demand.

 

CBOT December wheat rose 17 1/4 cents to US$5.50 1/4 a bushel, after dropping Tuesday to the lowest closing price since Nov. 12. March wheat rose 18 cents to US$5.71 1/2.

 

Wheat on other U.S. exchanges also rose. At the Kansas City board of Trade, December wheat rose 17 cents to US$5.46 1/2 a bushel, while Minneapolis Grain Exchange December wheat gained 10 3/4 cents to US$5.82.

 

The euro topped US$1.51 Wednesday afternoon, the dollar's weakest point of the year, on expectations U.S. interest rates will remain low for a prolonged period. A weak dollar helps export demand by making U.S. grain cheaper for foreign buyers.

 

"You can buy more bushels for the same amount of euros, or whatever the currency," said Alan Brugler, president of Brugler Marketing & Management LLC, in Omaha, Neb.

 

With little fresh grain market news and volume thin before the U.S. Thanksgiving holiday Thursday, traders focused on the dollar's weakness, along with gold futures' climb to a record US$1,189 an ounce.

 

The outside markets helped spur traders who bet on wheat price declines earlier this week to buy those short positions back, Brugler said. On Tuesday, December CBOT wheat plunged 4.4% to US$5.33 a bushel, the lowest closing price in almost two weeks.

 

"Yesterday's pressure was previous longs getting out, and existing bears had a free ride down," Brugler said. Friday's grain futures trading is "probably going to be determined by what the dollar is doing."

 

Many analysts expect wheat futures to resume a downward course because of abundant global wheat supplies and sluggish U.S. exports.

 

At the end of the 2009-10 marketing year, U.S. wheat stocks will total 885 million bushels, the U.S. Department of Agriculture estimated earlier this month.

 

That would be up 35% from 2008-09 and the highest ending stocks since 950 million bushels in 1999-2000.

 

The U.S. will export 875 million bushels of wheat in 2009-10, down 14% from 2008-09 and the lowest since 2002-03, according to the USDA.

 

Speculative funds bought an estimated 4,000 wheat contracts Wednesday, CBOT floor sources said.