Tuesday, October 26, 2010

Why Dollar's Loss Is Wheat's Gain

Whatever goes up comes down as life moves in cycles especially in the trading world. Testimony to the fact is that United States of America was the world's most expensive wheat producer in the first half of the year but now with the recent slide in the US dollar, the US suppliers are not only more competitive than their European counterparts despite higher freight costs, but the country is expected to dominate the international wheat market until the end of the year as the weak dollar makes the country's exports the cheapest in the world.

Weak Dollar Driving Wheat Prices

The movement in the dollar index has a lot of effect on commodities and other currencies, even if it does not replicate the action of the index. The dollar has been hovering around its lowest level against the euro since January and at 1215 GMT.

The euro was at $1.3949, up from $1.3888 in early trade, while US wheat futures at the Chicago Board of Trade (CBOT) ended mostly higher Friday since dry growing regions may not receive as much relief as they previously expected. (more)

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