Wheat futures led rising grain-and-soybean markets on Wednesday, helped by a lower U.S. dollar.
The grain-and-oilseed sector lagged other commodities in recent weeks, with hedge funds betting heavily that prices were headed lower. But analysts said a lower dollar, along with changing chart signals and supply outlook, prompted money managers to start getting out of some of those short positions.
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"Funds are heavily short corns, beans and wheat and are starting to cover those positions as the technical trends are starting to turn higher," said Brian Hoops, president of brokerage Midwest Market Solutions.
The dollar was trading at multiyear lows. The WSJ Dollar Index, which measures the greenback against a basket of foreign currencies, fell almost 1% to 83.29.
The recent slide in the dollar has helped to make U.S. crops cheaper for global buyers.
Prices for U.S. wheat, which analysts say is particularly dependent on an exchange-rate advantage over competitors in Russia and the Black Sea region, rallied. March wheat futures rose 2.7% to $4.33 a bushel at the Chicago Board of Trade.
American exporters also benefited on Wednesday from Brazilian political developments. The Brazilian real strengthened against the dollar after a court upheld graft convictions against former Brazilian president Luiz Inácio Lula da Silva. That put Brazil's soybean farmers, who compete with the U.S. for Chinese market share, at a disadvantage.
CBOT March corn futures rose 1.5% to $3.56 1/2 a bushel, while March soybean contracts gained 0.6% to $9.92 1/4 a bushel.
A number of factors contributed to a tightening supply outlook, also bolstering markets. Dry weather in Argentina intensified concerns over damage to the country's corn and soybean crops, while some private forecasters trimmed their outlook for U.S. corn and soybean acreage this year.
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(END) Dow Jones Newswires
January 24, 2018 16:15 ET (21:15 GMT)