July 20, 2011


CBOT wheat jumps to one-month high on corn rally



CBOT wheat futures climbed to a one-month high on speculation that US livestock producers will use more of the grain as an alternative feed ingredient after the price of corn rose.


Corn futures reached a five-week high after the government said US crop conditions deteriorated, while hot weather this week threatens to erode yields. Corn and wheat futures for September delivery have traded close to parity in the past month, compared with an average premium for wheat of US$1.95 a bushel in the past year.


"All the wheat market is doing is following on the coattails of corn," an analyst said. "If the price relationship would continue to improve, you would see more wheat used in the feed rations."


Wheat futures for September delivery gained 4 cents, or 0.6%, to settle at US$6.935 a bushel on the Chicago Board of Trade. Earlier, the price climbed to US$7.2775, the highest for a most-active contract since June 16. The grain is up 19% in the past year.


The dollar fell as much as 0.8% against a basket of major currencies, enhancing the appeal of grain from the US, the world's biggest exporter.


Usually, "the wheat market reacts more to the dollar than the other grains," another analyst said.


Wheat is the fourth-largest US crop, valued at US$13 billion in 2010, behind corn, soy, and hay, government data showed.

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