Wheat May Rise, Spurred by ‘Dollar Bears’: Technical Analysis

Wheat futures may jump 8 percent by the end of March if a declining dollar drives the grain past a key level, according to Derek Lewis, a ClearTrade Commodities trader in Chicago.

Wheat may reach $5.25 a bushel on the Chicago Board of Trade if a falling dollar propels futures above $4.95, Lewis said. That would spur some fund managers to end bets on falling prices, covering short positions, he said. The most-active contract last closed above $4.95 on March 4, and it has been two months since it last settled above $5.25, on Jan. 14.

“If we can make it back above $4.95, we could see some short-covering,” Lewis said. “Then the challenge would be to get above $5.25 because then we’d come into some resistance. It’s all predicated on the dollar. If we put in new lows there, we could see the grains move up, because that will probably encourage some buying.”

Credit Suisse analysts said in a March 4 report that they remain “strategic dollar bears.” The greenback has declined against the euro in four of the past five sessions, and dropped 1 percent against the 16-nation currency last week.

The dollar may fall to as low as 67 cents per euro, Credit Suisse said. That would be a drop of 8.4 percent from yesterday’s close.

By Tony C. Dreibus
Source: Bloomberg