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Wheat Futures Gain as Falling Dollar Makes U.S. Grain Appealing PDF Print E-mail
Oct. 29 (Bloomberg) -- Wheat prices rose for the first time in five sessions as a decline in the dollar made U.S. supplies more attractive to overseas buyers and to investors seeking an inflation hedge.

The dollar fell as much as 0.6 percent against a basket of six major currencies today and has dropped almost 10 percent in six months. The slump may boost the appeal of commodities for investors seeking a haven against rising prices. A weaker dollar also allows overseas customers to buy more grain when paying with other currencies.

“You have to keep an eye on the dollar,” said Dan Kuechenmeister, the manager of the commodities department at RBC Dain Rauscher in Minneapolis. “It’s all dollar all the time right now.”

Wheat futures for December delivery rose 14 cents, or 2.8 percent, to $5.0875 a bushel at 10:38 a.m. on the Chicago Board of Trade. A close at that price would leave wheat up 11 percent for the month.

The price also may be rising on renewed concern that growers will plant less soft-red winter wheat than planned because rains delayed harvests of corn and soybean crops. Some farmers plant winter wheat on land used for corn and soybeans.

About 20 percent of the corn crop was collected as of Oct. 25, compared with a five-year average of 58 percent, and 44 percent of soybeans were harvested, less than the five-year average of 80 percent, according to the U.S. Department of Agriculture.

Delayed Harvests

“The late harvest is keeping wheat from getting planted,” Kuechenmeister said. One could make the argument for a little support for U.S. wheat prices because we don’t expect as large a soft-red crop.”

Soft-red winter wheat is used to make cookies and cakes and is grown in the eastern Midwest from Arkansas to Ohio. Hard-red varieties are sown from Nebraska to Texas and used to make bread. Winter wheat is seeded starting in September and harvested beginning in June.

Wheat is the fourth-biggest U.S. crop, valued at $16.6 billion in 2008, behind corn, soybeans and hay, government data show. The U.S. is the world’s largest exporter of wheat.

Last Updated: October 29, 2009 11:44 EDT
 
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