Strong U.S. Dollar Pushes Down Grain Prices

November 14, 2016 06:58 PM
Strong U.S. Dollar Pushes Down Grain Prices

The soaring U.S. dollar's 11-month high helped to  push down soybean and corn futures Monday, analysts say.

“The stronger dollar is negative for commodities,” says Joe Vaclavik, president and founder of Standard Grain, in Chicago. The dollar’s gains are tied to the idea of an interest rate hike in December, he adds.

November soybeans fell 5 1/2 cents to $9.73 and corn slipped 3 ¼ to $3.37 in early trading Monday. CBOT November soybeans closed at $9.71, down 7 2/5 cents, while CBOT December corn closed at $3.37 2/5, down 3 cents.

The stronger dollar, along with reports that China may take steps to curb commodity speculation, weighed down soybean and corn prices, according to analysts.

“The bond and currency markets are forcing some liquidation by some of the funds,” explains Andrew Shissler,  partner at S&W Trading in Downers Grove, Ill.

The market also was reacting to weekend reports that China may take some steps to curb speculation in the commodity markets, Vaclavik says

“The volatility in the Chinese commodity markets ... is really a problem over there, so apparently the government is going to try to step in and do something," he says. "As a result, I think we’re seeing some big liquidations in some of these Chinese commodity markets … and  that has put some pressure on the U.S. markets.”

Traders are getting skittish, faced with the strong dollar and huge supplies, according to Shissler.

“People are scared to death of these markets,” he says. “The grain fundamentals behind corn, beans and wheat are bearish enough that we could make new lows for the year in all of them."

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