Euronext wheat futures dropped to their lowest in almost a year on Monday as investor worries about China hit commodity markets and sent the euro soaring in a setback for European grain exports. December milling wheat, the most active contract on the Paris-based Euronext market, fell as low as 170.75 euros a tonne, a level it had last touched in September 2014.
The contract settled 2.25 euros or 1.3 percent lower at 173.75 euros, with chart support around 171 euros and a slight rebound in US wheat helping it to trim earlier losses. The euro climbed to a seven-month peak against the dollar at $1.1711 as investors rattled by a slowing Chinese economy exited riskier bets and bought back low-interest rate currencies. Chinese share prices plunged 9 percent, fanning a sell-off in global equity and commodity markets.
"We're falling because of the macro picture and the euro rally, that's all there is to it today," one futures dealer said. The run-up in the euro further dented export sentiment just as traders were becoming hopeful last week's drop would stir demand for western European wheat. "The strength of the euro will hit German and other EU export prospects and comes at a bad time when Europe is facing large supplies after good harvests this summer," a German trader said.
Germany's wheat harvest was almost over and was showing decent volume and quality, adding to export supply after an estimated record-large French crop. German cash markets tracked the weakness in Paris. New crop standard wheat with 12 percent protein content for September delivery in Hamburg was offered for sale at 0.5 euro over the Paris December contract against 1 euro over on Friday. Buyers were seeking 0.5 euros under Paris. The market slide could intensify a price struggle between producers and exporters.
"Faced with the price tumble, sellers who were already very reluctant have all disappeared. Prices are now below production costs and instalments paid by co-operatives to their farmers are looking too high," a French cash broker said. Oilseeds saw heavier losses than grains given the influence of China on the complex as the world's largest soybean buyer. On Euronext, November rapeseed lost as much as 18.25 euros to set a lowest spot price since late January at 339.25 euros. It settled 8.75 euros or 2.5 percent lower at 348.75 euros.