EU wheat futures fall

Euronext wheat futures slipped to a new four-month low on Monday as investor jitters over China reinforced prevailing bearish sentiment in well-supplied grain markets. March milling wheat on the Paris-based Euronext market settled down 2.50 euros at 171.00 euros a tonne, after touching a low of 170.50 euros a tonne in closing trade.
A sharp fall in Chicago, where wheat futures set contract lows, pushed Euronext prices below a support zone around 172-173 euros, dealers said. The first session of the new year saw broad losses in financial markets, following a plunge in Chinese share prices that triggered a trading suspension. "You can't get away from the fact that grain markets are heavy from a fundamental perspective," consultancy Agritel said in a note.
"On top of this you have a negative financial environment with investors staying away from commodities and Chinese equities tumbling 7 percent on this first trading day of 2016." Front-month wheat futures on Euronext fell 13 percent in 2015. Wheat markets made some gains last week amid fears about flood damage in US wheat belts and deep frosts in Russia and Ukraine, but weather forecasts pointed to less severe conditions this week.
Stiff export competition, notably from Argentine wheat, continued to cap international prices. In export news, three ships due to load more than 180,000 tonnes of French wheat for Egypt were being delayed because exporters had not received letters of credit, trade and shipping sources said.
In Germany, export sentiment was also downbeat. "Exports remained slack over the holiday period with heavy competition from the Black Sea and South America meaning a sharp fall in German overseas wheat sales is expected," one trader said. "One ship is currently loading 65,000 tonnes of wheat for Yemen but the vessel line-up is thin compared to last year." Standard wheat with 12 percent protein content for January delivery was offered for sale unchanged at level the Paris March contract. Buyers were offering 0.75 euro under. January trade was reported at 173 euros or level Paris at the time of the deal. The arrival of colder weather after an unusually warm start to the winter was not causing concern among German traders.