The grain prices Thursday hiked in Chicago as U.S. dollar tumbled against the euro, boosting the appeal of agricultural products on the global market. Corn and soybean futures rebounded from five-week lows while wheat registered the biggest gain in almost two weeks.
The most active corn contract for December delivery increased 16 cents, or three percent, to 5.4175 U.S. dollars per bushel. December wheat rose 12.75 cents, or two percent, to 6.4515 dollars per bushel. January soybean gained 37 cents, or three percent, to 12.42 dollars per bushel.
Market traders mainly attributed Thursday’s rebound to a weaker U.S. dollar. Dollar lost most in two weeks against euro, as the market is more optimistic over the Ireland debt problem. Ireland’s central-bank governor said that the country is likely to seek a " substantial” bailout, as the government entered talks with officials from the European Union and the International Monetary Fund.
A weaker dollar could help boost the value of agricultural products, which is priced in dollar, for investors holding other currencies and thus, drives up the price.
Besides, market traders noted that funds returned to buy after the grain prices suffered consecutive drops in the prior few days. Both corn and soybean Wednesday fell to the lowest level in the latest five weeks.
As for the wheat, a trader noted that lower dollar and dry weather in the western Plains hard red winter wheat belt were all supportive for wheat after Wednesday’s scattered showers stayed in the eastern Plains.
Besides, a strong demand also helps buoy up the market. According to U.S. Department of Agriculture, the wheat sold this week were well above trade expectations, reaching 986,944 metric tons for the marketing year 2010-2011, increasing 19 percent from a week earlier.
A trader noted that the demand is going to continue to stay strong due to the problems in Russia this summer.
