Bullish U.S. dollar pinning U.S. grain futures: analyst

WINNIPEG — Chicago Board of Trade corn and soybean futures remained largely unchanged over the past week, but a bullish American dollar, which is currently out-performing much of the world’s other currencies, will keep the long-term bias pointed lower, according to an analyst.

“We’re going to need a weather event, we’re going to need a drought; only way we’re going to see a good rally,” said Scott Capinegro of Barrington Commodity Brokers in Barrington, Illinois.

He noted the March contract comes off the board on Friday, March 13, when it will be replaced by the May contract. However, he doesn’t expect it will do very much to spark upward action.

“It will have some problems up there too,” he said.

Although both corn and soybeans are essentially seeing sideways trading action right now, Capinegro is higher on corn than beans, especially new crop.

“If there is a wet spring, it won’t take away from bean acres, it will increase it even more,” he said, adding some corn had already been planted in the Delta, with conditions being on the wet side already.

The U.S. Federal Reserve is scheduled to meet next week to discuss the thorny issue of whether to raise interest rates in the United States. Although many feel a hike is coming sooner rather than later, Capinegro doesn’t believe either option will do much to alleviate the pressure on grains.

“That won’t make the dollar break, either way,” said Capinegro.

He noted the American greenback will encounter some corrections as part of its natural movement, but it still looks quite strong.

As well, the plunging price of crude oil is also pressuring ethanol, which most corn farmers rely on, he said.

“If we didn’t have an ethanol program that uses 40 percent of our corn production, we would be under US$3,” said Capinegro.

Some corn farmers have break-even prices of $4.44 per bushel or $4.50 a bu., said Capinegro, which wouldn’t likely be met anytime soon.

“Look at the corn charts, for the past four to six weeks we’ve been hanging in a 25 cent trading range, we don’t move,” he said.

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