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Grains Pressured by Higher Dollar

The grains are getting pressured this morning by a stronger dollar which is testing new highs.

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In the overnight session the grains moved lower with corn down 1 ½ cents, soybeans down 8 ¼ cents and wheat down 5 ½ cents. Minneapolis wheat is down 4 ½ this morning after a 15 cent gain in yesterday’s session. The cash market is firming for spring wheat in Portland which saw basis rise 20 cents yesterday. Spot basis is now at +293 off the May contract which is well above the three year average basis of +201.

The U.S. Dollar index is pushing higher this morning, closing in on the 95.85 level it traded at back on January 26th. If it closes above that level it is likely that the dollar will resume its upward trend and start another leg higher. Strength in the U.S. dollar is a main reason why U.S. wheat exports have been noncompetitive on the global market.

The Brazilian trucker strike has calmed substantially from last week when over 100 roadblocks were scattered throughout the country. However, the situation has not resolved itself completely. On Tuesday there were 18 roadblocks that remained and although a key highway to Mato Grosso has been opened up, roadblocks still remain for grain headed for the port of Paranagua.

Yesterday, Argentina grain farmers announced they will suspend grain sales for three days in protest of government policies such as export quotas. Traders see this as a political move to help bring agriculture to the front of attention during this year’s elections. There are no concerns yet that exports will be interrupted, but it will be important to pay attention to any further developments of this strike.

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