Wheat Futures Rise as Weaker Dollar Boosts Commodities Appeal

Wheat futures rose for the third time in four sessions as the dollar’s retreat increased the allure of U.S. commodities.

The dollar dropped as much as 0.6 percent today against a basket of six major currencies. The Reuters/Jefferies CRB Index of 19 raw materials rose for the first time this week.

“If the dollar stays under pressure, we’ll see support in all commodities,” said Jerod Leman, a broker at Wellington Commodities in Carmel, Indiana. The possibility of adverse U.S. weather affecting crops signals that “we have room to run to the upside,” he said.

Wheat futures for May delivery rose 8 cents, or 1.6 percent, to $5.1375 a bushel on the Chicago Board of Trade. The price has dropped 5.1 percent this year, partly on forecasts for bigger global inventories.

The price may decline in the next month because rising production in the past two years boosted world stockpiles, Leman said. About 195.9 million metric tons will be in storage in the year ending May 31, up 19 percent from a year earlier, the U.S. Department of Agriculture said on Feb. 12.

“It’s hard to get bullish long term,” Leman said.

Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.

By Tony C. Dreibus
Source: Bloomberg