Chicago | Reuters — U.S. wheat futures fell about two per cent on Monday, joining a broad decline in commodities as the dollar roared to an 11-month high, analysts said.
Soybeans and corn also sagged, with a sell-off in Chinese soy futures adding pressure.
Chicago Board of Trade December wheat settled down nine cents at $3.94 per bushel after hitting $3.92-1/2, its lowest since Oct. 5 (all figures US$).
December corn ended down three cents at $3.37-1/4 a bushel after falling to its lowest since Oct. 3. January soybeans finished down 1-3/4 cents at $9.84-1/4 a bushel after notching a four-week low at $9.75-1/4.
Wheat posted the biggest percentage decline as the dollar climbed, making U.S. grains less attractive on the world market. The U.S. exports about 40 per cent of its wheat crop.
Because wheat is produced in many other regions of the world, it faces more competition for export business than corn or soybeans.
“The story of the day continues to be the strength of the dollar and the widespread selling of the broader commodity sector,” INTL FCStone chief commodities economist Arlan Suderman wrote in a note to clients.
“Wheat has taken the brunt of the selling among the major ags because it is most vulnerable to the consequences of a strong dollar,” Suderman said.
The dollar rose against a basket of currencies as the risk of faster inflation and wider budget deficits sent Treasury bond yields shooting higher. The dollar has been romping ahead since Donald Trump’s win in the U.S. presidential election last week triggered a massive sell-off in Treasuries.
Wheat traders also eyed the possibility of another big Russian wheat crop next year. Russian farmers have sown the largest grain area of the last seven years and could add more in the coming weeks, analysts said last week.
Corn followed wheat lower, with both markets pressured by huge global grain inventories.
CBOT soybeans fell in early moves as soy futures on China’s Dalian Commodity Exchange tumbled five per cent on talk of government measures to crack down on speculation.
“Soybeans have seen a bit of pressure and I think some of the decline has got to do with the weakness in Chinese soybean markets,” said Phin Ziebell, agribusiness economist at National Australia Bank.
But reminders of fresh export demand underpinned soybeans, with the U.S. Department of Agriculture confirming private sales of 456,000 tonnes of U.S. soybeans in the last day.
— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.