Chicago grain prices extend gains on market optimism, weaker dollar

Chicago grain prices extended gains on Tuesday amid increasing optimism in the eurozone after Italy managed to sell government bonds to the market, even though at a record high price.

The most active corn contract for March delivery rose 7 cents, or 1.2 percent, to close at 6.055 U.S. dollars per bushel. March wheat jumped 23 cents, or 3.9 percent, to 6.16 dollars per bushel. January soybean rallied 4 cents, or 0.4 percent, to close at 11.25 dollars per bushel.

Italy sold 7.5 billion euros (about 10 billion U.S. dollars) worth of bonds on Tuesday. A trader mentioned that the euro had received some support after Italy managed to sell government bonds to the market even though it was forced to pay record high auction yields.

The stronger euro helped lift grain prices, as dollar- denominated commodities appear more appealing to holders of other currencies when the greenback falls in value.

The Commitments of Traders report showed that speculators cut wagers on rising commodity prices to the lowest since July 2009 in the week ending November 22, amid fears that Europe's inability to stem its debt crisis will dent demand for raw materials as global growth slows.

Meanwhile, the strong rally in crude oil price amid rising geo- political tensions over Iran also helped set a positive tone for the grain market.

The COT report also showed the combined speculative and fund net short position in the wheat market totaled a new record level of 82,964 contracts.

Source: Xinhua News