US wheat futures fell nearly 2 percent on Thursday as India's announcement that it will allow 2 million tonnes of wheat to be exported threatened to further weaken export US grain prospects, traders said. "It is just another wrinkle thrown in there," said Dewey Strickler, president of Ag Watch Market Advisors, a grain industry consultancy.
A firm dollar, which makes US commodities less attractive to investors seeking a hedge against inflation, hung over agricultural futures throughout the trading session. Wheat, corn and soyabeans all closed lower for a third straight day on Thursday. The front-month Chicago Board of Trade wheat futures contract fell to its lowest level in 3-1/2 weeks on Thursday and CBOT corn hit its lowest mark since August 23.
The drop in corn, its biggest in a week, came as US Midwest farmers gear up for harvest. Although the crop is expected to be disappointingly small, processors and elevators will still be flooded with grain in the coming weeks. "The market has plenty of short-term supply even though crops might be tight long term," said Bob Utterback of Utterback Marketing Services, a brokerage for farmers.
Southern farmers, who have already started their harvest, were reportedly bringing crops straight to elevators instead of holding their grain in on-farm storage bins, Utterback said. The grains markets showed little reaction to Federal Reserve Chairman Ben Bernanke's comments that the central bank would spare no effort to boost weak growth and lower unemployment. Bernanke offered no details of steps monetary policymakers might take in his speech to the Economic Club of Minnesota.
Chicago Board of Trade December wheat futures settled down 13-1/2 cents at $7.38 a bushel. CBOT December corn was down 14 cents at $7.34 a bushel and CBOT November soyabeans closed down 2-1/2 cents at $14.18-1/4 a bushel. CBOT wheat volume was light, falling about 35 percent below its 30-day average, but soyabean and corn volume were typical for the past month.
CBOT December wheat fell below its 30-day moving average during the session but found some support around its 50-day moving average. India will allow unrestricted exports of 2 million tonnes each of wheat and common rice, a government minister said on Thursday, as bulging stocks offer political room for overseas sales.