Wheat futures rally one percent to one-year peak

Wheat futures rose nearly one percent in American trade even as the dollar index hit the highest since May 30, following earlier data from the US, the world's second largest wheat exporter. 

As of 08:44 GMT, wheat futures due on July 15 rose 0.98% to $4.8775 a bushel from the opening of $4.8525, marking the highest since mid 2016, while the dollar index rose 0.27% to 97.81 from the opening of 97.55. 

Wheat prices drew support from the US Department of Agriculture's report that showed a huge drop in spring wheat conditions, while classifying spring wheat for the year 2016-2017 as 41% good or excellent, down 4% from the previous week's 45%, and sharply lower than 76% last year. 

The US National Weather Service's report showed no chances of rainfall in the next two weeks in North Dakota, america's largest spring wheat producer, which in turn bolstered wheat futures as the US winter wheat harvest starts with expectations for the lowest harvest since 1909.

US farmers used 32 million acres for winter wheat this year, down 10% from last year, and the second lowest in US history, with total harvest expected at 1.82 billion bushels, down 21% y/y.

Moving globally, Australian wheat could suffer as well this week due to heavy rains, while rains might bolster Ukrainian wheat this weekend while noting the rains could be limited in the north according to recent forecasts. 

in Western Europe, the dry season has started to hit crops there, especially in Northern France, while noting global wheat inventories remain high, especially in Australia, as recent data from Rabobank showed the ratio of inventories compared to total usage is 33% in Australian, up from the historic averages of 29%. 

Finally, global wheat output has risen by 3% in the last five months, while average consumption grew below 2% on average, as China alone accounts for 45% of global wheat inventories, rising by 100 million tonnes, while Rabobank expects wheat prices to rise between 10% and 15% in the next 12 months to $4.9 by mid 2018.