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NEW YORK ( TheStreet) -- Corn and wheat futures were strengthening Monday morning on the back of broader gains in commodities.
"Grains [were] higher overnight in sympathy with an overall commodity rebound and setback in the U.S. dollar," says MF Global broker Joseph Vaclavik.
"Commodities, generally priced in dollars, become a better deal for foreign buyers when the U.S. currency weakens. The U.S. dollar index was softer by 0.07% to $74.86.
The July wheat contract was gaining 2.3% to $7.76 ¾ a bushel and at the helm of agricultural commodity leaders Monday morning. Bad planting conditions were providing a boost.
July corn futures were rising 1.5% to $6.96 ½ a bushel as the bullish market for this grain persists.
According to Benson Quinn Commodities, cool and wet conditions continue to hamper spring wheat planting across the northern U.S. and Canada. Meanwhile, the weather continues to be overly dry in the European Union, former Soviet Union and northeast China.
MF Global's Vaclavik believes that corn continues to be in a bull market, but hiccups could occur. For instance, the narrowing spread between new corn contracts and old corn contracts indicates that something isn't quite right with demand, he notes. "Slow export demand and falling livestock prices has some wondering about the future of demand."
Food and agricultural research organization Informa estimates that corn acres this year will be at 91.9 million this year vs. the U.S. Department of Agriculture estimate of 92.2 million acres. If the weather is good this summer, the market will likely be $1.50 overpriced for new corn crop, and if the weather is bad and yields are low, new corn could be $1.50 underpriced, according to Vaclavik.
Corn Products International(CPO) was rising 0.5% to $53.79, while food giants
General Mills(GIS - Get Report) and
Kellogg(K - Get Report) traded sideways at $38.62 and fell 0.2% to $56.62, respectively. Farm equipment maker
Deere(DE - Get Report) was rising 0.6% to $92.04.
Fertilizer stocks were trading in mixed territory, with
Mosaic(MOS - Get Report) up 0.4% to $71.45,
Agrium(AGU - Get Report) down 0.2% to $84.01 and
CF Industries(CF - Get Report) 0.7% higher at $138.82.
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-- Written by Andrea Tse in New York.
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