Wheat Gains as Decline to Two-Week Low May Increase Demand

By Jae Hur

Oct. 29 (Bloomberg) -- Wheat advanced for the first time in five days on speculation that the price drop to a two-week low may increase demand from overseas importers.

Wheat futures lost 10.3 percent in the previous four days as forecasts for drier weather in the eastern Midwest helped accelerate U.S. planting delayed by rains. The Dollar Index was little changed after gaining for a fifth day against six major currencies, boosting appeal of commodities as an alternative investment.

“It’s a short-term rally after sharp drops,” said Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co. Commodities had been under pressure since late last week as the dollar index rallied after touching the lowest level since August last year, he said.

Wheat for December delivery rose 0.6 percent to $4.975 a bushel in electronic trading on the Chicago Board of Trade at 4:02 p.m. Tokyo time. The grain touched $4.9125 yesterday, the lowest level since Oct. 13 and is poised for the first weekly drop in four.

About 76 percent of the winter-wheat crop was sown as of Oct. 25, behind the five-year average of 85 percent, the U.S. Department of Agriculture estimates.

The Dollar Index was at 76.436 as of 4:04 p.m. Tokyo time, compared with yesterday’s last trade of 76.467. The index fell to 74.940 on Oct. 21, the lowest level in more than a year. A drop in the dollar makes U.S. grain supplies cheaper for holders of other currencies.

Warm Weather

Corn for December delivery was little changed at $3.6925 a bushel. The grain touched $4.135 on Oct. 23, the highest price for a most-active contract since June 22.

Soybeans for January delivery earlier fell as much as 0.5 percent to $9.6525 a bushel before trading at $9.7225 a bushel. The most-active contract reached $10.2925 on Oct. 23, the highest price since Aug. 14.

Corn and oilseed fell yesterday on speculation that warmer, drier weather will allow U.S. farmers to speed up rain-delayed harvests.

About 20 percent of the corn crop was collected as of Oct. 25, compared with 58 percent, the average for same time of the season in the previous five years, the USDA said this week. The soybean harvest was 44 percent done, versus the previous five- year average of 80 percent.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net