Forexpros – U.S. grain futures were higher on Thursday, as a broadly weaker U.S. dollar supported prices ahead of the release of a key monthly U.S. government report on U.S. and global grain supplies.
Agricultural commodities received a lift as risk sentiment improved after closely watched auctions of Spanish and Italian government debt met with solid investor demand and lower yields, easing fears over the fiscal health of the region’s third and fourth largest economies.
The U.S. dollar pulled back from a 16-month high against the euro following the auctions, while the dollar index declined 0.3% to trade at 81.33. A weaker dollar boosts the appeal of U.S. crops to overseas buyers and makes commodities more attractive as an alternative investment.
Meanwhile, traders readjusted positions ahead of the U.S. Department of Agriculture’s closely-watched World Supply and Demand Report due later in the day. USDA January crop reports have, historically, triggered sharp price moves in futures.
On the Chicago Mercantile Exchange, corn futures for March delivery traded at a three-day high of USD6.5763 a bushel, gaining 0.92%.
The USDA report was expected to lower its forecast for U.S. corn stocks to a fresh 16-year low and downgrade crops in Argentina and Brazil, as hot and dry weather conditions in recent weeks damaged crops in those countries.
Elsewhere on the Chicago Board of Trade, soybeans for March delivery rose 0.48% to trade at USD12.0913 a bushel.
Wall Street investment bank Morgan Stanley said in a report that it expected downward revisions to soybean production estimates in Brazil and Argentina of up to 2 million tons each, “owing to developing drought conditions.”
Soybean prices have remained well-supported in recent weeks as dry and hot weather conditions damaged crops in Argentina and Brazil, the world’s second and third largest soy exporters.
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, wheat for March delivery jumped 0.8% to trade at a one-week high of USD6.4638 a bushel.
Wheat prices were expected to remain vulnerable as the government report was forecast to show an increase in U.S. winter wheat plantings to the largest in three years.
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.
Forexpros
