Wheat climbs to seven-month high even as dollar rebounds

Wheat futures rose nearly one percent in American trade to late July highs, as the dollar index rebounded from December 17, 2014 lows for the seventh session out of eight, following earlier data from the US, the world's second largest wheat exporter, while Federal Reserve Chair Jerome Powell testified on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC, today. 

As of 08:53 GMT, wheat futures due on May 15 rose 0.90% to $4.770 from the opening of $4.7275, while the dollar index advanced 0.57% to 90.37 from the opening of 89.85, marking February 9 highs. 

In his testimony earlier today, Powell expressed admiration for former Chair Janet Yellen's work to strengthen the economy and normalize the balance sheet, lauding her for helping to smooth out the transition and provide continuity in monetary policy. 

Powell expected the Fed to continue tightening monetary policy gradually, while pointing to economic outlook as strong, asserting the importance of balancing the push of inflation just towards the target and not beyond it, adding that labor strength will underpin spending and income. 

On Thursday, Powell will testify on the Semiannual Monetary Policy Report before the Senate Banking Committee, in Washington DC, thus completing the second half of his Congress testimony. 

Earlier US data showed durable goods orders fell 3.7% in January, compared to a 2.8% rise in December, and missing expectations of a 2.4% drop, while core orders also fell 0.3%, compared to a 0.7% rise in December and missing forecasts of 0.4% rise. 

The goods trade deficit widened while wholesale inventories rose past expectations in January, as the House Price index slowed more than expected in December. 

The Richmond Manufacturing Index rose to 28 in February from 14 in January, beating expectations of 15, while the CB consumer confidence survey rose to 130.8 in February from 124.3 in January, beating forecasts of 126.2. 

The US Department of Agriculture released its monthly report on wheat inventories for the marketing year ending next May 31, forecasting 1,009 million bushels, up from 989 million in January forecasts, as exports projections fell to 950 million from 975 million. 

As well, the USDA reported total wheat sales in the week ending February 8 at 311.1 thousand tonnes, down 21% from the previous week, and down 2% from the four-week average, as analysts expected between 200 and 400 thousand, with Japan at the top of the buyers list with 84.4 thousand tonnes, followed by Indonesia at 83.3 thousand. 

Then Taiwan at 78.5 thousand, then Mexico, China and Guatemala at 58.7 thousand, 33.0 thousand, and 31.5 thousand tonnes respectively, while unknown buyers accounted for 130.5 thousand tonnes. 

Otherwise, Egypt, the world's largest wheat importer, announced a March deadline to set up local prices a month before harvest, with the Egyptian agriculture ministry stating that wheat used in the bread subsidy program reached 9 million tonnes a year. 

The Egyptian ministry didn't specify whether it will link local prices with global ones, or get back to the old system, where it subsidized farmers with a price higher than the global one, noting that Egypt bought about 3.6 million tonnes of local wheat last year.