Wheat futures on the Chicago Board of Trade rallied to close 3 percent higher on Friday on fund buying amid the plunging value of the dollar, traders and analysts said.
"Typically when we see the dollar drop the perception is for an improved export outlook and I think that's in the back of traders' minds today," said Dale Gustafson, analyst for Citigroup. CBOT wheat closed 10-1/2 to 25 cents per bushel higher, with December up 13-3/4 at $5.00 per bushel.
Markets closed early at noon CST (1800 GMT) on Friday because of the US Thanksgiving Day holiday trading lull. Additional support to the wheat market was stemming from some mounting concerns about dry weather in portions of China's wheat belt and dryness in the far southern portion of the US Plains, they said.
There was nothing in the export arena to drive the market higher with USDA on Friday reporting that 361,400 tonnes of wheat were sold for export last week, within trade estimates for 350,000 to 450,000 tonnes.
Crop weather continues to be talked about in the market with dry weather in parts of China and in the US Plains cited as a potential supportive factor for wheat futures.
Meteorlogix weather on Friday said China's southern wheat areas received beneficial rain late this week but the Shandong province remained dry. Meteorlogix also said only light precipitation was seen in the US Plains. New-crop July wheat surged during the shortened trading session on Wednesday and some analysts said the strength may have been tied to some concern about the fate of the 2007 US winter wheat crop.
However, they also cautioned that there is plenty of time for winter and spring moisture to be received and give a boost to crop prospects. Strong grain and wheat prices in China was causing the government to take steps to cool off the price rally.
There was news that China is selling 1.2 million tonnes of wheat from state reserves on Saturday in an effort to boost supplies to help ease rising domestic prices. The Chinese government is releasing the stocks to boost supplies and meet the demand of flour mills.
High prices have encouraged Europe's farmers to sow more wheat for the 2007 harvest and good weather so far this autumn puts the bloc on track for a good-sized crop next year, traders and analysts in Paris said on Thursday. The International Grains Council on Friday raised its estimate for 2006-07 world wheat production to 586.6 million tonnes from the previous projection of 585.2 million.