Wheat plumbs three-week low as dollar powers up

Wheat futures fell nearly one percent in American trade to April 5 lows as the dollar index rose to January 19 highs, following earlier data from the US, the world's second largest wheat exporter, and as rainfall in southern US hills failed to match expectations. 

As of 07:58 GMT, wheat futures due on July 15 fell 0.58% to $4.7450 from the opening of $4.7725, while the dollar index rose 0.67% to 90.92 from the opening of 90.32, marking three-month highs. 

Earlier US data showed the preliminary services PMI rose to 54.4 from 54 in March, beating forecasts of 54.3, while manufacturing PMI rose to 56.5 from 55.6 in March, beating expectations of 55.2. 

Existing home sales rose 1.1% in March to an annualized 5.60 million units, compared to a 3% rise in February to 5.54 million, beating expectations of a 0.2% rise to 5.55 million units.

The dollar index hit two-month highs 10-year US treasury yields rallied to early 2014 highs near 3%. 

The US Department of Agriculture reported wheat sales dropped 66.9 thousand tonnes in the week ending April 12 to the lowest this marketing year, with Philippines at the top of the list at 48.3 thousand tonnes, then Chile at 33 thousand, and Peru at 7.4K, while Japan and unknown buyers cancelled 63K and 67K tonnes of shipments.

The USDA's report on Tuesday showed only 31% of winter wheat harvest is good or excellent, compared to 30% in the previous week, and much lower than 52% in the same period of last year. 

The USDA also reported 483.06 thousand tonnes of inspected wheat in the week ending April 12, up from 431.48 thousand in the previous week, and 685.44 thousand tonnes in the same period of last year, with total inspected wheat product in the marketing year starting June amounting to 20.9 million tonnes, down from 23.2 million in the previous year. 

Otherwise, the USDA recently released its monthly report on supply and demand projections, raising expectations for US wheat inventories in the marketing year of 2017-2018 by 30 million bushels to 1.064 billion bushels, while maintaining wheat prices projections between $4.6 and $4.7 per bushel. 

The USDA raised forecasts for global wheat supplies by 3 million tonnes, while expecting another record high for output at 759.8 million tonnes, with growth in supplies expected to surpass consumption growth, while global wheat inventories are expected to rise by 2.3 million tonnes to 271.2 million tonnes.