Wheat Gains as Declining Dollar Makes U.S. Grain More Appealing

Wheat climbed the most in almost two weeks as the declining dollar makes grain from the U.S., the world’s biggest shipper, more attractive to overseas buyers and as a hedge against inflation.

The greenback fell as much as 0.7 percent against a basket of six major currencies and the euro. The decline followed the Federal Reserve’s decision to keep U.S. interest rates unchanged and an agreement by EU finance ministers to help Greece weather a fiscal crisis, if needed. A declining dollar increases the purchasing power of commodity buyers from abroad.

“It looks like the dollar is trading wheat,” said Jon Marcus, the president of Lakefront Futures & Options LLC in Chicago. “Wheat is a little on the oversold side. The dollar is getting beat up.”

Wheat futures for May delivery jumped 7.75 cents, or 1.6 percent, to $4.87 a bushel on the Chicago Board of Trade, the biggest gain for a most-active contract since March 3. Wheat has dropped 10 percent this year, partly on slack demand for U.S. grain and rising global inventories.

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

Tony C. Dreibus
Source: Bloomberg