Wheat futures fell for a fourth straight session as the dollar gained before a Federal Reserve decision today on economic stimulus.
The Fed plans a second round of monetary easing by buying $600 billion in long-term securities, the central bank said today after grains trading closed in Chicago. The dollar rebounded from a two-week low against a basket of six competing currencies, and fluctuated after the Fed statement. A stronger dollar makes U.S. commodities less appealing for importers.
Wheat futures fell as “the dollar battled its way back,” said Shawn McCambridge, the senior grain analyst for Prudential Bache Commodities LLC. The Fed statement “seems like it’s fallen into place with meeting expectations,” spurring “volatility” in the U.S. currency, he said.
Wheat futures for December delivery dropped 4 cents, or 0.6 percent, to settle at $6.9025 a bushel at 1:15 p.m. on the Chicago Board of Trade. The price has fallen 3.9 percent since Oct. 28. The grain still has climbed 44 percent since the end of June as drought harmed crops in Russia.
Twenty-nine economists in a Bloomberg News survey before the Fed report expected that the central bank would buy at least $500 billion in bonds. The dollar rose as much as 0.3 percent and fell as much as 0.7 percent.
Newly planted hard-red winter-wheat areas in the Great Plains may receive as much as 0.4 inch (1 centimeter) of rain starting on Nov. 9, and parts of the Midwest may get up to 0.8 inch, according to a report today from World Weather Inc.
Much of Kansas, the largest winter-wheat state, Oklahoma and western Colorado have had less than half of normal rainfall in the past 30 days, according to the National Weather Service. Wheat yields may not be damaged if enough rain comes after plants emerge from dormancy in April and May, said Alan Brugler, the president of Brugler Marketing & Management LLC.
“We know that fall crop-condition ratings don’t have a real good correlation to final yields in winter wheat,” Brugler said from Omaha, Nebraska. “You prefer to have big stands in the fall so you don’t have to rely on spring weather as much. You can fret about it, but really you can’t bet on it.”
Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.