Strong US dollar pushes wheat closer to four-year lows

CANBERRA: Chicago wheat futures edged higher on Friday, but were set for a 3.5% weekly drop, pressured by a firmer US dollar and strong exports from Russia and Ukraine despite forecasts of tighter supply next year.

EU soft wheat crop to rebound to 11pc next year

Soybean futures were flat and headed for a 2.6% weekly loss after plunging on Thursday to their lowest levels since 2020, with a vast Brazilian harvest expected in the coming months.

Corn inched higher and was almost steady for the week, holding near the 5-1/2-month high reached last week when the US Department of Agriculture lowered its forecast for US end-of-season inventories.

Fundamentals

• The most-active wheat contract on the Chicago Board of Trade was up 0.2% at $5.34-1/4 a bushel at 0130 GMT, eking out gains after six consecutive sessions of declines. Prices are nearing July’s four-year low of $5.14.

• CBOT corn was trading 0.2% higher to $4.41-1/2 a bushel and soybeans were flat at $9.63 a bushel.

• The US dollar index sat at a two-year high after the Federal Reserve this week cut interest rates and signalled a slower easing trajectory in 2025.

• A stronger dollar makes US crops less competitive, compared with supplies from rival exporters.

• The weekly US corn, soybean, and wheat export sales data released on Thursday met analysts’ average expectations.

• The wheat market remains comfortably supplied for the time being. Russian shipments are still large, albeit less so than earlier in the year, and the pace of Ukrainian exports this season has far exceeded that of last season.

• Harvests now wrapping up in Argentina and Australia exceeded expectations, easing concerns about an immanent drop-off in Russian supply.

• European Union production of soft wheat could rise 11% in 2025/26 in a rebound from a 12-year low this season, consultancy Strategie Grains said.

• Soybeans benefited from technical trading on Thursday, traders said, but remain under pressure from the strong dollar, ample supply, weak Chinese demand for US beans and a slide in soyoil prices amid doubts over US biofuel policy.

• However, China’s Sinograin purchased nearly 500,000 metric tons of US soybeans this week for shipment in March and April, traders familiar with the deals said.

• Speculators remain net short CBOT wheat and soybeans, meaning they anticipate lower prices, and net long CBOT corn. Funds were net buyers of soybeans and corn and net sellers of wheat on Thursday, traders said.