US wheat futures face downfall on dollar rise

 

 

Continued fund liquidation and a rally in the U.S. dollar drove U.S. wheat futures to double-digit losses Friday and to lower closes for the week.

 

Chicago Board of Trade March wheat finished 13 1/2 lower cents at US$5.58 per bushel, down 11 3/4 cents on the week. Kansas City Board of Trade March wheat fell 13 cents to US$5.49, and Minneapolis Grain Exchange March wheat dropped 14 1/4 cents to US$5.63.

 

Wheat slid amid pressure from the firm dollar and losses in CBOT corn, crude oil and gold, traders say. A strong dollar is often seen as bearish because it makes U.S. grain less attractive to foreign buyers. The other markets are connected to wheat because funds often trade in a basket of commodities. Wheat is also linked to corn because both can be used for animal feed.

 

The dollar climbed on better-than-expected jobs data that raised hopes of economic recovery, an analyst said. The jobs report showed U.S. employers cut 11,000 non-farm jobs in November, compared with an expected drop of 125,000 and following a revised reduction of 111,000 jobs in October.

 

Commodity funds sold an estimated 3,000 wheat contracts at the CBOT, traders said. They were even heavier sellers in neighboring CBOT corn.

 

"Many anticipated that investment money would come in the first of the month," said Larry Glenn, analyst/broker for Frontier Ag. "It didn't do it. Without that crowd in there, we take away the most bullish factor in the grains for the last three to four weeks, and so the market just collapsed back down."

 

CBOT March wheat finished at its lowest price since Nov. 24.

 

 

Kansas City Board of Trade

 

KBCT March wheat finished down 10 cents on the week. The contract closed at its lowest price since Nov. 24.

 

Strong gains in the U.S. dollar kept KCBT wheat on the defensive, traders said. There is a lack of supportive fundamental news, with the U.S. struggling to make export sales amid competition from other countries, they said.

 

 

Minneapolis Grain Exchange

 

MGE March wheat settled down 7 3/4 cents on the week. The contract closed near its session low of US$5.62 and at its lowest price since Nov. 24.

 

It was bearish that Statistics Canada on Thursday raised its wheat-production estimate above trade expectations, Glenn said. There will be "some high quality wheat that's going to be available" for export, Glenn said. That means more competition for the U.S. Canada has traditionally been a major wheat producer and exporter on the world market.