(Bloomberg) -- Wheat fell as weak demand and improving weather in the US overshadowed an outsized interest-rate cut from the Federal Reserve.
Futures in Chicago dipped as much as 1.8%, extending losses this week amid weaker exports for European Union soft wheat and better conditions for US winter wheat planting.
Demand for US wheat also remains low. The country sold 246,300 tons of wheat for 2024/2025 in the week ended Sept. 12, down almost half from the prior week, according to the US Department of Agriculture.
Easing monetary policy generally has a bullish effect on commodity markets, as lower interest rates stimulate consumption and economic activity. But traders had already factored in the Fed’s decision, according to a CRM AgriCommodities note, which added “markets are now pricing in further rate cuts this year.”
The downward trend is likely temporary, according to Dennis Voznesenski, associate director of sustainable and agricultural economics at Commonwealth Bank of Australia.
“I’m still expecting wheat prices to keep rising in the longer term because of tighter global supplies in key exporters and dry conditions in Russia and Ukraine,” he said.
©2024 Bloomberg L.P.
