GRAINS-Corn and wheat lower as crude rally pauses
By Renee Hickman
CHICAGO, March 20 (Reuters) - Chicago grains and oilseeds retreated on Friday as a crude oil rally cooled and the dollar regained ground.
Forecasts of rain in dry U.S. wheat belts next week also curbed grain prices.
Grain and oilseed prices have broadly tracked fluctuations in crude oil during the U.S.-Israel war against Iran, reflecting the widespread use of corn and soyoil in biofuels and investor interest in the crops as an inflation hedge.
Brent crude LCOc1 ticked lower on Friday, as plans by the U.S. and its allies to boost oil supply and restore shipping through the Strait of Hormuz tempered investor jitters over attacks on Gulf energy facilities this week. O/R
The most-active corn contract on the Chicago Board of Trade (CBOT) Cv1 was down 4-3/4 cents to $4.65 a bushel by 11:28 a.m. CDT (1628 GMT), breaking a three-day rally.
CBOT wheat Wv1 lost 10-1/4 cents to $5.97-3/4 a bushel, after rising in the two previous sessions. CBOT soybeans Sv1 lost 6-1/4 cents to $11.62-1/4 a bushel after three sessions of gains.
Mike Zuzolo, president of Global Commodity Analytics and Consulting, said investors were reacting to a Federal Reserve decision on Wednesday to leave interest rates unchanged. He added that "we don't have an outright bull market in the energies like we did last week."
The dollar gained ground on Friday as investors pared their bets on Fed rate cuts, given the probability of rising inflation triggered by higher energy prices.
The U.S. central bank also on Wednesday projected higher inflation, steady unemployment and a single reduction in borrowing costs this year.
A stronger dollar tends to make U.S. exports more expensive, rendering them less competitive in global markets.
Wheat futures also were hurt by "a real trouncing of the Russian currency, which is improving the Russian demand potential for exports," Zuzolo said.
And some weather models are showing rain pushing into the U.S. wheat belt in the coming weeks, adding to the pressure.
