Forexpros – Wheat futures regained strength on Thursday, bouncing off the previous session’s one-week low as the U.S. dollar weakened broadly after European leaders made a breakthrough in resolving the region’s debt crisis.
On the Chicago Mercantile Exchange, wheat futures for December delivery traded at USD6.3488 a bushel during European morning trade, surging 2.47%.
It earlier rose by as much as 2.75% to trade at a daily high of USD6.3638 a bushel.
Appetite for riskier assets was boosted after European leaders reached an agreement with banks to take a 50% writedown on the face value of their Greek debt holdings.
Additionally, euro zone leaders agreed to enhance the size of the European Financial Stability Facility, the region’s bailout fund, to EUR1 trillion, while a plan to recapitalize the region’s banks was also agreed upon.
The news saw the euro jump to a seven-week high against the U.S. dollar, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.87% to trade at 75.76, the lowest since September 8.
A weaker dollar boosts the appeal of U.S. crops to overseas buyers and makes commodities more attractive as an alternative investment.
Wheat prices found further support after Ukraine’s official weather service, the Hydrometeorological Centre, warned that approximately 1.0 million hectares of farm land intended for winter-wheat plantings may go unsown due to a lack of rain.
The weather group said earlier that almost 1.5 million hectares of the wheat crop already planted were “under risk” after being seeded into dry soil, potentially threatening yields and reducing the quality of the harvest.
Lower wheat exports from Ukraine could boost demand for U.S. supplies, which is the world’s third largest wheat producer and biggest exporter of the grain.
Some mild bargain buying also emerged after wheat prices tumbled nearly 2.8% to hit a one-week low on Wednesday after Egypt, the world’s biggest wheat importer said it bought 120,000 metric tons of Russian wheat.
Elsewhere on the Chicago Mercantile Exchange, corn for December delivery rallied 1.79% to trade at USD6.4863 a bushel, while soybeans for January delivery jumped 2.02% to trade at USD12.4425 a bushel.
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