Chicago | Reuters — U.S. wheat futures retreated on Friday after a five-session rally, led by declines in corn and soybeans as a surging dollar prompted broad weakness in commodities.
The dollar set a fresh 12-year high against the euro on expectations of a Federal Reserve interest rate hike.
At the Chicago Board of Trade, May wheat settled down 5-1/4 cents at $5.02 per bushel (all figures US$). May corn ended down eight cents at $3.80-1/2 and May soybeans fell 16-1/2 cents at $9.74 a bushel.
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Wheat still managed to post a weekly gain of about four per cent, its biggest in a month, reflecting fund short-covering and worries about dryness in the U.S. Plains.
But corn dropped 1.4 per cent this week and soybeans fell 1.1 per cent.
May soybeans hit a one-month low one day after the release of disappointing weekly U.S. export sales data.
“The dollar strength is wreaking havoc on the commodities here. We are seeing some pressure with the weak (corn and soybean) export sales as the dollar continues to march higher,” said Darin Fessler of Lakefront Futures and Options Inc.
Soybeans were also anchored by expectations for rising global soy inventories as the South American harvest progresses.
“We’re really faced with extremely hefty soybean production,” said Leopold Michallet of French consultancy Agritel. “The Brazilian harvest is looking good and the truck strike seems to be over.”
CBOT May corn posted a daily loss of 2.1 per cent, the most in six weeks, and dipped to its lowest in two weeks as commodity funds sold an estimated 11,000 contracts.
“The weakness in the euro versus the U.S. dollar has led to more EU corn sales into typical U.S. markets,” said Ed Duggan with Top Third Ag Marketing in Chicago.
“With the dollar back trading over par here, it’s going to be difficult for us to remain competitive on the export front,” he said.
— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Michael Hirtzer in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore.
