US wheat and corn futures extended their losses on Monday, in line with weaker financial markets after Friday’s deadly attacks in Paris that renewed risk aversion and lifted the dollar, hurting demand for commodities priced in the greenback.
Asian stocks fell to six-week lows and emerging market currencies wilted, dragged down also by downbeat data showing Japan’s economy slipped back into recession in the July-September quarter.
In grains, Chicago Board of Trade December wheat futures fell 0.66 to $4.92-1/2 a bushel after closing down 0.5% on Friday, while corn fell 0.1% to $3.58 after closing down 1%.
The dollar strength is certainly adding downward pressure to wheat prices, but the other elephant in the room is fundamentals – which are very good,” said Phin Ziebell, agribusiness economist, National Australia Bank.
The dollar has gained more than 2% against a basket of currencies this month. A firm dollar makes commodities priced in the greenback costly for holders of other currencies.
Wheat is also coming under pressure due to forecasts for showers across the US Midwest and possibly the Plains next week that should help winter wheat ahead of dormancy.
The US Department of Agriculture (USDA) expects US wheat exports to hit a 44-year low during the 2015/16 season.
The USDA reported export sales of US wheat in the week ended November 5 at 226,700 tonnes, in line with trade expectations for 150,000 to 350,000 tonnes.
It said weekly export sales of soybeans totalled 1.297 million tonnes in the latest week, topping the high end of market estimates that ranged from 600,000 to 1 million tonnes.
Strong demand for US supplies underpinned CBOT prices of the oilseed, which rose 0.15% to US$8.56-1/2 a bushel after closing down 0.9% on Friday.
Private analytics firm Informa Economics on Friday raised its forecast for 2016 U.S. soybean plantings to a record 85.3 million acres. It estimated US winter wheat plantings for harvest in 2016 at 38.7 million acres, which would be down from 39.5 million for 2015 and the smallest since 2010.
(Source – http://www.thestar.com.my/Business/Business-News/2015/11/16/Wheat-corn-extend-losses-on-firm-dollar/?style=biz)