Wheat Prices Drop as Dollar Strengthens

Wheat and other commodities continue to fall on the assumption the strengthening U.S. dollar and equities market will continue to rise.

Another variable is the increase in planting this year which could cause prices to fall in the long term.

"Some of the financial stocks look better, and some people feel that the worst is over" for the U.S. economy, said Vince Ambrose, a trader at MF Global in Chicago. "With the dollar being strong, it's going to hurt these commodities."

Wheat futures fell by 15 cents for May delivery, to $9.14 a bushel on the CBOT at about 12:30 p.m. Earlier in the day they fell to the lowest since January 11, selling for $8,9875 a bushel. Monday's contracts fell by 60 cents, the maximum allowed on the exchange.

Inventories, which fell last year because of poor weather, should increase this year with the larger acreage planted.

Winter Wheat

U.S. farmers have planted 4.1 percent more winter wheat than last year during September through December, according to the report released by the U.S. Department of Agriculture.

Spring wheat sowing is also expected to increase by 7.8 percent over last year's April and May plantings.

"I don't see wheat falling out of bed," said Vince Ambrose, a trader at MF Global in Chicago. "Everybody grows wheat, and the weather looks better, maybe not so much in the U.S. but globally. Along with that, we'll see lower prices down the line."

The increase in planting and supply should keep the wheat prices down more than in the recent past.

The wheat crop in the U.S. is worth about $13.7 billion, the fourth-largest crop in the U.S. The leading crops are corn, soybeans and hay.