Firm US dollar weighs on agriculture

Most agricultural markets yesterday were affected not so much by the excitement over China and Greece but by the fact that the US dollar index had climbed to a five-week high. Corn prices were additionally pressured by the USDA's report on Monday that the proportion of corn plants in good or excellent condition had risen by one percentage point in the last reporting week. 

Soybeans closed at below $10 per bushel again for the first time in a week. The performance of prices over the next few weeks is likely to determine whether another Brazilian soybean acreage record is achieved in 2015/16, said Commerzbank. Although sowing is only due to start in two months' time, corn - which is competing for acreage - has to be planted earlier, meaning that a decision as to which crop to plant has to be taken sooner. Soybeans are less costly to grow and in particular require significantly less fertilizer. 

Wheat also fell yesterday and is now again priced 5.5% lower than at its peak a week ago. The wheat price in Paris shed 2% yesterday and closed only marginally above €200 per ton. Apart from the negative news from the US, the fairly optimistic 2015 crop appraisal of the French agricultural ministry is also likely to have put pressure on the price, according to Commerzbank. 

According to the ministry, 1% more soft wheat is set to be harvested than in 2014, the increased acreage more than compensating for lower yields. That said, it was also pointed out that high temperatures and a lack of rainfall could further weigh on yields.