Wheat drops as higher Russian exports, stronger dollar weigh

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Forexpros - Wheat futures were down on Thursday, falling to a two-day low amid concerns that higher Russian wheat exports would reduce demand for U.S. supplies, while a broadly stronger U.S. dollar also weighed.

Chicago Mercantile Exchange, wheat futures for September delivery traded at USD6.9762 a bushel during European morning trade, tumbling 1.69%.

It earlier fell as much as 1.75% to trade at USD6.9712 a bushel, the lowest price since August 2.

Russia's Grain Union President Arkady Zlochevsky said on Wednesday that the country was expected to export a total of 20 to 25 million metric tons of wheat in the 2011-12 marketing season.

Mr. Zlochevsky added that wheat exports in August could reach 3.5 million metric tons, higher than a record high of 3.1 million tons exported in a single month.

The forecast comes a week after Deputy Prime Minister Viktor Zubkov, who is responsible for Russia's agricultural sector, said the country would produce 90 million tons of wheat, up from a previous estimate of 85 million tons and higher than the 61 million harvested a year earlier.

Russia, once the world's second largest wheat exporter, introduced a ban on grain exports last August after the worst drought in at least half a century wiped out 37% of its wheat crops.

Increased wheat exports from Russia could weigh on demand for U.S. supplies, which is the world's third largest wheat producer and biggest exporter.

Meanwhile, the dollar was broadly higher against its major counterparts after the Bank of Japan intervened in currency markets to curb the yen's recent sharp gains.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 1.2% to hit a two-week high of 75.10.

A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.

Elsewhere on the Chicago Mercantile Exchange, corn for September delivery fell 0.62% to trade at USD6.9950 a bushel, while soybeans for September delivery shed 0.43% to trade at USD13.5350 a bushel.

Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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