Hard red winter wheat futures at the Kansas City Board of Trade ended sharply higher on Friday as dry weather worries and a falling dollar pushed new-crop contracts to new highs.
KCBT wheat closed 6-1/2 to 15 cents per bushel higher, with December up 8 cents at $5.21 per bushel and March up 9-1/4 cents at $5.37-3/4. New-crop July wheat rose to a new high of $5.15, while September hit a new high at $5.10-1/2.
Traders said a slide by the dollar to the lowest levels since April 2005, combined with fears about drought stress on the new US HRW wheat crop, fuelled the rally.
Traders also cited dryness in China's wheat growing areas. In an indicator of how tight world wheat supplies have become, the Chinese government said it was set to sell off 1.2 million tonnes of wheat from state reserves on Saturday. The move is aimed at boosting supplies and easing rising domestic prices, the National Development and Reform Commission said Friday.
In other news of note on Friday, the US Department of Agriculture said on Friday that weekly net export sales of US wheat totalled 361,400 tonnes, 12 percent above the previous week but 37 percent under the prior four-week average. Trade estimates were for 350,000 to 450,000 tonnes.
The International Grains Council on Friday raised its estimate for world wheat production in 2006-07 (July-June) to 586.6 million from its previous projection of 585.2 million. Meanwhile, the European Union on Thursday rejected all bids for licenses to export free-market wheat and barley with zero refunds at its weekly tender.
The nine-day relative strength index for the March contract stood at 46 ahead of Friday's opening bell. Chart-watchers consider 30 and below a sign of an oversold market and 70 and above indicative of an overbought market. Kansas City December wheat options expired on Friday, and the KCBT closed at noon CST following Thursday's Thanksgiving holiday.
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