Chicago grain futures reverse gains as dollar bounces off

08:40, November 02, 2010      

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Chicago wheat futures slumped 2.1 percent Monday after hitting a three-week high, weighed by the strengthening U.S. dollar and speculator's profit-taking. Corn inched down, snapping a five-session winning streak. Soybean also ended a tad lower.

The most active corn contract for December delivery pared 4.75 cents, or 0.8 percent, to 5.7725 U.S. dollars per bushel. December wheat plunged 14.75 cent, or 2.1 percent, to 7.025 dollars per bushel. January soybean dipped 1 cent, or 0.1 percent, to 12.35 dollars per bushel.Market traders noted that the early weakness in dollar has driven corn and wheat prices higher early in the session, with corn price once hit 5.9075 dollars per bushel, the highest level since September 2008.

But the rally in grain commodities gradually ran out of steam after the opening, as the greenback staged a strong comeback after a series of upbeat U.S. economic data released. A stronger dollar makes the U.S. agricultural products pricier on the international market and thus, erode their competitive edge.

"Dryness in parts of the U.S. starts causing some concern for the winter wheat crop. But the wheat market itself has been fluctuating rather aggressively off the ebb and flow of the dollar, "said David Hightower, president of The Hightower Report.

"And those outside market influences might become very important in the grain market over the coming trading sessions, as quantitative easing and the U.S. election may pull the attention from inside, outside the grain markets, and that could create a very volatile week ahead,"Hightower added.

Source: Xinhua


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