Weak Dollar and Trump’s Statements Are Driving Up Grain Prices

Increase in Grain and Oilseed Prices

In the Chicago Commodity Exchange, grain and oilseed prices have risen, led by hard red wheat. Factors behind the increase include the recent weak dollar, weather conditions, and U.S. President Donald Trump's statements regarding increasing the use of biofuels and ethanol.

Concerns About Crop Damage

Frigid weather conditions in the U.S. and Russia have heightened concerns about potential crop damage. Wheat futures rose by 3%, reaching 5.39 dollars/bushel, the highest level in eight weeks, marking the largest increase since November 17.

The Impact of Weather Conditions on Prices

The record cold in the central and eastern regions of the U.S. supports wheat prices, while Russia's abnormal cold poses a risk of production decline.

Weak Dollar and Export Expectations

Trump's comments regarding the weak dollar have affected the dollar, which is trading near a four-year low, increasing the competitiveness of the U.S. against Brazilian soybeans and Russian wheat. Additionally, Trump's statements about expanding E15 ethanol sales have strengthened expectations for increased corn-based demand. However, uncertainty remains about when these sales will begin throughout the year.

Market Reaction and Expert Opinions

Joe Davis, director of Futures International in Chicago, pointed out that ethanol measures require Congress approval, stating that the market's reaction may remain limited until tangible results are seen.

Dennis Voznesenski, an agricultural economist at the Commonwealth Bank of Australia, noted that the weakening dollar generally makes U.S. agricultural exports more attractive.