The greenback surged while corn, wheat and soybean futures fell on Tuesday, raising speculation that the risk trade may be unwinding to some degree.
All three commodities have posted strong performances this year, largely on the back of supply worries from around the globe. The worst damage was done in the Black Sea region of Russia and the Ukraine, where drought seared the crops and led both nations to ban or limit grain exports. However, there's also concern that Australian, Canadian and U.S. production of some grains might not measure up to expectations.
"Chinese interest rates and the value of the dollar don’t have much correlation, but it caught people leaning the wrong way," said Roy Huckabay, the executive vice president for the Linn Group in Chicago, told Bloomberg News. "Commodities bore the brunt of the dollar's rally today."
Comex December wheat futures retreated 19 cents to $6.71 per bushel, while the March 2011 contract lost 18 and 1/4 cents to $7.09 and 1/2 per bushel.
November soybean futures slid 5 cents to $11.79 per bushel. Finally, Comex December corn futures lost 11 and 1/4 cents to trade at $5.46 per bushel;
On October 13, corn futures reached $5.88 per bushel, the highest price in two years.
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