Wheat heads for biggest weekly fall since June on dollar rally

Chicago wheat futures rose on Friday but were on track for their biggest weekly fall since June due to pressure from a rapidly strengthening U.S. dollar and improved growing conditions in major producing regions.

Corn was unchanged and soybeans slightly higher, but both were also heading for weekly declines, as traders worried that biofuel policy changes under incoming U.S. president Donald Trump will reduce domestic demand.

The most-active wheat contract on the Chicago Board of Trade Wv1 was up 0.4% at $5.32-1/4 a bushel at 0425 GMT after falling to $5.28 on Thursday, its lowest since Aug. 27.

Prices were heading for a weekly decline of 7.4%.

The dollar .DXY was headed for its largest weekly gain in more than a month and hovered near a one-year high, buoyed by expectations of fewer Federal Reserve rate cuts and the view that Donald Trump’s policies could stoke inflation.

The higher dollar will make U.S. crops more expensive compared to crops from other exporters, said Nick Booth at agricultural consultants Mecardo.

“Coupled with Trump’s tariff plans, the risk is that U.S. stocks build, which could have a negative impact on global wheat prices,” he said in a note.

Not only have rains eased dry conditions in the U.S. Plains and the Black Sea region, but dry skies in soaking Western Europe helped accelerate planting and early yields in Australia suggest its harvest will exceed recent expectations.

However, some analysts expect the market to tighten over the coming months as Black Sea supply drops. Farmers in top exporter Russia have been selling wheat hand over fist but exports are likely to fall.

CBOT soybeans Sv1 rose 0.4% to $9.91 a bushel but were down 3.8% this week, and corn Cv1 was unchanged at $4.19 a bushel and was down 2.8% for the week.

Soybeans and corn are still wrestling with Trump’s nomination of Lee Zeldin as head of the U.S. Environmental Protection Agency. Traders fear Zeldin’s opposition to biofuels could sap demand for feedstocks, with CBOT soyoil BOZ24 also falling sharply this week.

Improving cropping conditions in Argentina and Brazil suggest supply will be plentiful next year, but demand for U.S. soy and corn has been solid in recent weeks from overseas buyers and local soy crushers.
Source: Reuters (Reporting by Peter Hobson; Editing by Varun H K)