Chicago Board of Trade wheat futures declined on Thursday, ending a three-day winning streak as grain markets lost momentum and traders repositioned ahead of a long U.S. holiday weekend.
Market participants said the U.S. dollar’s recent strength contributed to the downward pressure. The dollar index rose after the Federal Reserve decided to keep interest rates unchanged on Wednesday. Policymakers indicated they expect to raise borrowing costs later this year amid inflation running above the central bank’s 2% target.
A firmer dollar tends to make U.S. commodities more expensive for international buyers, a dynamic traders cited as a headwind for grain prices on Thursday.
Contract moves
On the Chicago Board of Trade, July soft red winter wheat settled 7 cents lower at $6.05-3/4 per bushel. The most-active September contract finished down 7-1/4 cents at $6.14 per bushel.
On other U.S. futures markets, K.C. July hard red winter wheat closed down 8-1/2 cents at $6.44 per bushel. Minneapolis July spring wheat fell 2-1/2 cents to finish at $6.23 per bushel.
Trading context
Traders adjusted positions ahead of the upcoming three-day U.S. holiday weekend, a factor market observers said contributed to the loss of momentum in grain markets. Chicago markets will be closed Friday for the Juneteenth holiday, shortening the trading week and potentially affecting liquidity.
The combination of a stronger dollar following the Fed decision and end-of-week positioning left wheat contracts lower across major U.S. benchmarks on Thursday.