Forexpros – Wheat futures extended gains on Thursday, trading close to the previous session’s two-week high as market sentiment strengthened after well received Spanish and French government bond auctions earlier in the day.
On the Chicago Mercantile Exchange, wheat futures for March delivery traded at USD6.1888 a bushel during European morning trade, gaining 0.78%.
It earlier rose by as much as 0.92% to trade at a daily high of USD6.2488 a bushel. Prices climbed to USD6.2900 a bushel on Wednesday, the highest since November 17.
Agricultural commodities continued to be affected by outside influences after Spain’s Treasury auctioned the full targeted amount of EUR3.75 billion of government bonds, while France auctioned as much as EUR4.5 billion of debt, but both countries saw borrowing costs increase.
High demand at the auctions, which were viewed as a key test of investor confidence in European sovereign debt, helped ease concerns over the region’s ongoing debt woes.
The news prompted investors to shun the safe haven U.S. dollar and move in to riskier assets, such as stocks and commodities.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.2% to trade at 78.31. A weaker dollar boosts the appeal of U.S. crops to overseas buyers and makes commodities more attractive as an alternative investment.
Meanwhile, wheat prices continued to draw support from the previous day’s coordinated action by the world’s major central banks, including the Federal Reserve and the European Central Bank to lower dollar swap rates to prevent a lack of liquidity in the global financial system.
Also underlining prices, the People’s Bank of China said Wednesday that it cut banks reserve requirement ratios by 0.5%, in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil
Despite the gain, Wall Street investment bank Goldman Sachs said in a report Wednesday that wheat futures have the worst prospects for gains in 2012, citing “relatively abundant global supplies”.
Wheat futures ended November with a decline of nearly 5.5%, as increasing competition for U.S. exports has been dominating sentiment in recent weeks.
Elsewhere on the Chicago Mercantile Exchange, corn for March delivery eased down 0.1% to trade at USD6.0813 a bushel, while soybeans for January delivery gained 0.5% to trade at USD11.3713 a bushel.
Later in the day, the U.S. Department of Agriculture was to publish its weekly report on U.S. grain export sales.
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