Investing.com - U.S. wheat futures extended strong gains from the previous session on Monday to hit a five-week high as concerns over the health of the winter-wheat crop combined with a broadly weaker U.S. dollar supported prices.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.4% to 97.67 on Monday. The index ended last week down 2.53%, the biggest weekly loss since October 2011.
The dollar's losses came after the Federal Reserve downgraded its forecasts for growth and inflation and lowered its interest rate projections, prompting investors to push back expectations on the timing and pace of future rate increases.
A weaker dollar increases the appeal of U.S. crops to overseas buyers and makes commodities more attractive as an alternative investment.
On the Chicago Mercantile Exchange, US wheat for May delivery touched a session high of $5.4038 a bushel, the most since February 18, before trading at $5.3688 during U.S. morning hours, up 6.47 cents, or 1.22%.
On Friday, the May wheat contract surged 18.0 cents, or 3.52%, to settle at $5.3000. Futures rose 27.0 cents, or 5.76%, last week, the second consecutive weekly gain.
According to the U.S. Department of Agriculture, Kansas winter wheat was rated 41% good to excellent as of last week, down from 46% in the previous week, while Oklahoma winter wheat was rated 40% good to excellent, compared to 42% in the previous week.
Meanwhile, US corn for May delivery tacked on 3.48 cents, or 0.9%, to trade at $3.8888 a bushel after hitting an intraday peak of $3.9113, the highest since March 12.
US corn for May delivery jumped 11.4 cents, or 3.08%, on Friday to close at $3.8500 as strength in wheat spilled over. Wheat and corn prices are linked because both can be used as animal feed.
Elsewhere on the Chicago Board of Trade, US soybeans for May delivery inched up 6.53 cents, or 0.67%, to trade at $9.8013 a bushel. Prices touched a daily high of $9.8163 earlier, the strongest level since March 13.
On Friday, US soybeans for May delivery advanced 12.0 cents, or 1.25%, to end at $9.7360.
Optimism over the outlook for supplies in Brazil and Argentina combined with indications over a slowdown in demand for U.S. soybeans have weighed on prices in recent weeks.
Brazil and Argentina are major soybean exporters and compete with the U.S. for business on the global market. Large South American crop prospects could weigh on demand for U.S. supplies.
Corn is the biggest U.S. crop, followed by soybeans, government figures show. Wheat was fourth, behind hay.