Chicago grains extend rally amid weak dollar, heat weather

14:14, July 14, 2011      

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Chicago grains further hiked on Wednesday, buoyed up by weakening U.S. dollar as well as the high temperature in the crop area, which is expected to hurt crop production in the coming year.

The most active corn contract for December delivery hiked 21.75 cents, or 3.3 percent, to close at 6.7975 U.S. dollars per bushel. September wheat gained 42.5 cents, or 6.3 percent, to 7.145 dollars per bushel. November soybean added 21.5 cents, or 1.6 percent, to 13.7975 dollars per bushel.

Market analysts said that besides the continuous momentum from Tuesday's bullish sentiment, the weakening dollar and heat weather forecast all helped bolster the agricultural products.

The Federal Reserve Chairman Ben Bernanke on Wednesday hinted that additional relaxed monetary measures, including a new round of bond-buying program, would be taken given a sluggish economic recovery, which hammered the value of dollar.

U.S. dollar index, which measures the U.S. unit's performance against a basket of six other major currencies, on Wednesday dropped more than one percent to around 74.89. A weaker dollar is usually supportive for such commodities as agricultural products.

Moreover, corn and soybeans also gained support from the expected yield losses due to adverse weather forecast, especially if the high temperature extended into next week, said market traders.

Besides, the corn market was additionally underpinned by strong ethanol demands. Statistics showed that ethanol production for the week ending July 8 reached 872,000 barrels per day on average, up 51,000 barrels, or 6.21 percent, from one year earlier.

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