(Forexpros) – U.S. soy and wheat futures regained strength on Monday, as the previous session’s sharp drop to multi-month lows created bargain buying opportunities for investors, although receding concerns over global supplies and mounting worries over dwindling demand for U.S. supplies was likely to continue to weigh on the grains complex.
Agricultural commodities received a boost from outside market influences, as the U.S. dollar came under pressure amid hopes for a resolution on the looming U.S. fiscal cliff.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.2% to trading at 81.09.
A weaker dollar boosts the appeal of U.S. crops to overseas buyers and makes commodities more attractive as an alternative investment.
On the Chicago Mercantile Exchange, soybeans futures for January delivery traded at USD13.9588 a bushel, up 0.9% on the day. The January contract rose by as much as 1.3% earlier to hit a session high of USD14.01 a bushel.
January soy prices plunged to USD13.7235 a bushel on Friday, the lowest level since June 15, amid indications of declining demand for U.S. supplies and as crop prospects in major South American growers improved.
China’s National Grain and Oils Information Center said last Friday the country cancelled previous orders of nearly 600,000 tonnes of U.S. soybeans, due to weak domestic demand and as a recent drop in prices made them unprofitable.
China is the world’s largest soybean consumer, accounting for nearly 60% of global trade of the grain in the 2011-12 season, according to the U.S. Department of Agriculture.
Soybean prices have been on a downward trend in recent weeks, losing nearly 22% since hitting an all-time high of USD17.8888 a bushel on September 4, amid easing concerns over shrinking global supplies.
Meanwhile, wheat for December delivery traded at USD8.4312 a bushel, gaining 0.55%. The December contract rose by as much as 0.75% earlier in the session to hit a daily high of USD8.4462 a bushel.
Wheat futures slumped to a four-month low of USD8.4350 a bushel on Friday, after the USDA said U.S. farmers sold 314,500 tonnes of wheat last week, compared to estimates in a range between 250,000 tonnes to 450,000 tonnes.
Elsewhere, corn futures for December delivery traded at USD7.3250 a bushel, adding 0.75% on the day.
Front-month prices rose by as much as 1.1% earlier in the session to hit a daily high of USD7.3538 a bushel, the strongest level since November 12.
Corn futures have been under pressure in recent weeks, losing approximately 14% since touching a record high of USD8.4237 a bushel on August 10, as a combination of easing concerns over the size of the U.S. harvest and worries over slowing demand for U.S. corn dampened the appeal of the commodity.
The U.S. produced 38% of the world’s corn last year, making it the both world’s largest corn producing nation and the largest exporter of the grain.
Corn is the biggest U.S. crop, followed by soybeans, government figures show. Wheat was fourth, behind hay.
