Grain futures - weekly outlook: March 23 - 27

Investing.com - U.S. grain futures rallied sharply on Friday, with wheat prices hitting a four-week high, as a broadly weaker U.S. dollar lifted demand for dollar-denominated commodities.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tumbled 1.4% on Friday to end at 98.05, moving further away from a 12-year high of 100.78 hit on March 13.

The dollar tumbled after the Federal Reserve downgraded its forecasts for growth and inflation earlier in the week 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 surged 18.0 cents, or 3.52%, on Friday to settle at $5.3000 a bushel by close of trade. Earlier in the day, wheat prices touched $5.3040, the most since February 20.

For the week, the May wheat contract rose 27.0 cents, or 5.76%, the second consecutive weekly gain, as concerns over the health of the winter-wheat crop supported prices.

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 jumped 11.4 cents, or 3.08%, on Friday to close at $3.8500 a bushel, tracking strong gains in wheat. Wheat and corn prices are linked because both can be used as animal feed.

On the week, the May corn contract tacked on 4.5 cents, or 1.25%, snapping a two-week losing streak.

Elsewhere on the Chicago Board of Trade, US soybeans for May delivery advanced 12.0 cents, or 1.25%, to end at $9.7360 a bushel on Friday. Prices of the oilseed hit an intraday peak of $9.8000, the highest level since March 13.

Despite Friday's gains, the May soybean contract dipped 0.13 cents, or 0.21%, on the week, the third straight weekly loss.

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.

In the week ahead, market players will focus on the release of key USDA data, including crop progress and weekly export sales figures.

Corn is the biggest U.S. crop, followed by soybeans, government figures show. Wheat was fourth, behind hay.