U.S. grains: Wheat surges on short-covering on tumbling dollar

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. wheat surged more than two per cent on Thursday, snapping a six-session losing streak as investors covered short positions and the dollar tumbled after the European Central Bank acted to fight low inflation.

Corn futures also jumped, while soybeans shook off earlier losses to turn narrowly higher at the Chicago Board of Trade.

The higher prices came despite weekly U.S. export sales that largely missed analysts’ expectations. U.S. wheat and corn are more expensive than other global supplies for shipments early in 2016, while top global soy importer China slowed its pace of buying slightly, U.S. Department of Agriculture data showed.

“It’s an outside-market day with the dollar just tanking,” said Futures International analyst Terry Reilly. “Traders are getting out of their positions from last week and early this week. With the lack of export interest in (U.S.) wheat, there’s not much else that’s driving this market.”

Wheat futures notched their biggest daily gains in more than a month, recovering from their worst skid since July. Most-active CBOT wheat for March delivery settled up 11-1/2 cents at $4.78-3/4 per bushel, even as prices still hovered near a 5-1/2 year low.

CBOT March corn finished 6-3/4 cents, or 1.5 per cent, higher at $3.77 per bushel, the highest in nearly a month. Soybeans for January delivery gained 5-1/4 cents to $8.97-1/2, the highest since Oct. 26.

“Corn popped to the upside after the U.S. dollar collapsed, with a bit of chart buying to top it off,” ED+F Man Capital analyst Charlie Sernatinger said in a note to clients.

The dollar fell more than two per cent against a basket of currencies after reaching a 12-year high on Wednesday. It lost ground against the euro after the ECB’s slight cut to its deposit rate was seen as disappointing to investors who expected more aggressive stimulus measures.

Weekly U.S. soybean sales of 878,300 tonnes were down 25 per cent from the previous week and were at the low end of trade estimates ranging from 800,000 to 1.2 million tonnes, USDA data showed.

Weekly wheat sales of 392,200 tonnes were up 29 per cent from the previous week and 17 per cent from the prior four-week average. Corn sales stood at 499,400 tonnes, down 76 per cent from the previous week.

Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Sybille de La Hamaide in Paris and Naveen Thukral in Singapore.

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