Forexpros – U.S. grain futures ended the week broadly lower on Friday, as prices came under pressure from a broadly stronger U.S. dollar while traders focused on short-term weather forecasts for major grain-producing countries in South America.
Agricultural commodities declined as the U.S. dollar rallied to a 16-month high against the euro on Friday, while the dollar index settled at 81.61, the highest since September 2010.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
The greenback strengthened amid concerns that the financial crisis in the euro zone is worsening, overshadowing better-than-expected U.S. employment data
On the Chicago Mercantile Exchange, soybeans for March delivery lost 1.48% on the week to settle at USD11.9388 a bushel by close of trade Friday, the lowest since December 30.
Agricultural meteorologists called for rain in the coming days in Argentina, a major producer of soybeans and corn. The rain could ease damage to Argentinean crops, which up until now have suffered from hot and dry weather conditions.
Industry weather group World Weather said Friday that most soy and corn growing regions in eastern Argentina and southern Brazil were expected to receive as much as 1.5 inches (3.8 centimeters) of rain beginning January 9.
Traders have been focusing on crop conditions in Southern Hemisphere countries in recent weeks, as most Northern Hemisphere crops have been harvested by now.
South America is major grain exporter and competes with the U.S. for business on the global market. A smaller crop outlook there would likely mean greater demand for U.S. supplies.
Meanwhile, corn futures for March delivery traded at USD6.4362 a bushel by close of trade on Friday, shedding 0.55% over the week.
The Buenos Aires Grains Exchange kept its estimate for Argentina’s 2011-12 commercial corn area unchanged at 3.74 million hectares, forecasting ample rains in the days ahead. Argentina is the world’s fifth largest corn producer.
Corn prices tumbled to one-week low on Thursday as market sentiment was rattled after France sold EUR4.02 billion of 10-year bonds in an auction which met with solid demand but at higher yields.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies Standard & Poor’s and Fitch’s in December.
Elsewhere on the Chicago Board of Trade, wheat for March delivery plunged 4.35% over the week to settle at USD6.2475 a bushel on Friday, the lowest since December 23.
Wheat prices came under heavy selling pressure after Egypt’s state grain buyer, the General Authority for Supply Commodities confirmed that it purchased 120,000 tonnes of wheat from France. A further 120,000 tonnes was split between Black Sea-region countries.
Egypt is the world’s largest wheat importer.
Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.
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