April 30 (Bloomberg) -- Wheat fell below $8 a bushel for the first time in five months as investors speculated the U.S. will slow the pace of interest-rate cuts, boosting the dollar and reducing grain exports that surged as the currency weakened.

The Federal Reserve, as expected, cut its benchmark rate by 25 basis points to 2 percent today after the close of wheat trading in Chicago. The central bank has reduced interest rates seven times since September, sending the dollar to a record low against the euro. A pause in the rate reductions may boost the dollar, reducing the appeal of U.S. wheat for overseas buyers.

``If the Fed cuts the rate 25 points, behind that it'll be insinuated that we're not going to do this anymore, and that will strengthen the dollar,'' said Darrell Holaday, president of Advanced Market Concepts in Manhattan, Kansas, before the Fed announced it had lowered rates.

Wheat for July delivery fell 7.5 cents, or 0.9 percent, to $8.01 a bushel on the Chicago Board of Trade, after earlier dropping to $7.9725, the lowest for a most-active contract since Nov. 21. Wheat is still up 65 percent in the past year.

The grain has plunged 41 percent since reaching a record $13.495 on Feb. 27 and is down 14 percent this month as the world's farmers increased planting, easing concern that rising demand will erode global inventories.

The U.S. central bank has slashed interest rates by 3.25 percentage points since September, reducing the value of the dollar against major currencies. That's helped boost interest in U.S. commodities.

Wheat Exports

Advance export sales of wheat in the marketing year that ends May 31 are 41 percent ahead of the year-ago period, U.S. Department of Agriculture data show. Actual shipments are up 46 percent, the USDA said in a report on April 24.

Still, analysts expect global production to rise as farmers plant more to capitalize on the higher prices. Farmers worldwide will harvest 645 million metric tons of the grain in the year that starts July 1, up 6.8 percent from the previous year, the International Grains Council said on April 24.

Producers in the U.S., the largest exporter of the grain, probably increased seeding in the marketing year that ends on May 31 by 5.6 percent to 63.8 million acres, the USDA said in a report last month.

``At this price level, growers are going to plant a lot of wheat,'' Holaday said.

Argentina

The price also may have declined on speculation Argentina may resume exports that have been stalled by government-imposed limits.

Argentina's government and farm groups are near an agreement, a farm spokesman said today. The South American country in November halted exporters from registering wheat for shipment out of the country to curb rising food costs. Those restrictions, set to end in April, are still in place.

Increased taxes and further export restrictions prompted farmers to go on strike on March 12, which led to food shortages.

Wheat was the fourth-biggest U.S. crop in 2007, valued at $13.7 billion, behind corn, soybeans and hay, government data show.

To contact the reporter on this story: Tony C. Dreibus in Chicago at Tdreibus@bloomberg.net.

Last Updated: April 30, 2008 16:32 EDT