Wheat rallies 6% to two-month high, dollar backs off year highs

Wheat futures rose over six percent to May 29 highs, as the dollar index backed off July 14, 2017 highs, following earlier data from the US, the world's second largest wheat exporter, and amid dry weather forecasts for the US, and drops in wheat product output in Europe and Russia. 

As of 07:45 GMT, wheat futures due on September 15 rose 6.37% to $5.4275 from the opening of $5.1025, marking two-month highs, as the dollar index shed 0.32% to 94.31 from the opening of 94.61. 

Earlier US data showed new home sales fell 5.3% in June to an annualized 631 thousand units, compared to a 3.9% increase in May to 666 thousand, while analysts expected a 3.1% drop to 668 thousand units. 

US President Donald Trump attacked China again in a tweet that says: "China is targeting our farmers, who they know I love & respect, as a way of getting me to continue allowing them to take advantage of the U.S. They are being vicious in what will be their failed attempt. We were being nice - until now! China made $517 Billion on us last year."

The office of the US Trade Representatives is holding an official hearing on Tuesday and Wednesday on proposed tariffs on Chinese products worth $16 billion, before presenting policy suggestions to the US President. 

US Secretary of Agriculture Sonny Perdue announced a $12 billion grant for farmers in food purchases and trade incentives to counter the harm done by the tariff war with China and the European Union. 

Otherwise, as drought rakes hold across Europe and Russia, wheat product takes a hit and prices surge accordingly. 

In the US, North Dakotan wheat product is also facing issues due to heat exhaustion, with monitors warning that wheat product there doesn't look promising due to weather conditions.