July 19 (Bloomberg) -- Wheat futures climbed to a one-month high on speculation that U.S. livestock producers will use more of the grain as an alternative feed ingredient after the price of corn rose.
Corn futures reached a five-week high after the government said U.S. crop conditions deteriorated, while hot weather this week threatens to erode yields. Corn and wheat futures for September delivery have traded close to parity in the past month, compared with an average premium for wheat of $1.95 a bushel in the past year.
“All the wheat market is doing is following on the coattails of corn,” Dewey Strickler, the president of Ag Watch Market Advisers, said in a telephone interview from Franklin, Kentucky. “If the price relationship would continue to improve, you would see more wheat used in the feed rations.”
Wheat futures for September delivery gained 4 cents, or 0.6 percent, to settle at $6.935 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price climbed to $7.2775, the highest for a most-active contract since June 16. The grain is up 19 percent in the past year.
The dollar fell as much as 0.8 percent against a basket of major currencies, enhancing the appeal of grain from the U.S., the world’s biggest exporter.
Usually, “the wheat market reacts more to the dollar than the other grains,” Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas, said in a telephone interview.
Wheat is the fourth-largest U.S. crop, valued at $13 billion in 2010, behind corn, soybeans and hay, government data show.
--Editors: Patrick McKiernan, Millie Munshi
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