European wheat fell to a four-month low on Thursday as renewed jitters over China sparked a broad slide in financial markets, reinforcing bearish sentiment in heavily supplied grain markets. A rebound in the euro from one-month lows against the dollar earlier this week, added to export concerns at a time when Egypt is looking to tighten import requirements and Argentina is aggressively offering grain on international markets.
March milling wheat on Paris-based Euronext was down 1.00 euro, or 0.6 percent, at 170.50 euros a tonne by 1615 GMT. It earlier fell to 168.75 euros, a fresh low since September 4 and near a contract low of 167.75 euros set on that date. But as in the previous session, a slight upturn in Chicago futures during US trading helped Euronext prices trim losses and hold chart support at 170 euros. Global shares tumbled for a sixth day on Thursday and oil prices slid to near 12-year lows, after China guided the yuan lower and share trading in the country was suspended for the second time in a week.
The devaluation of the yuan fuelled fears demand could be further dampened for dollar-priced commodities as the world's biggest consumer of raw materials grapples with slowing growth. In exports, traders were waiting to see the outcome of discussions in Egypt about a zero-tolerance policy for grain fungus ergot.
"You've got the euro that is rebounding, all the news from China, Egypt and the ergot issue (in Egypt), Argentina and Russia offering competitive prices. That makes a lot of bearish things," one futures dealer said. The policy move is being opposed by traders, who say it is virtually impossible to guarantee wheat with no traces of ergot.
The ergot issue has added to headaches for exporters after three cargoes of French wheat have been held up due to delays in obtaining letters of credit from GASC. In Germany, the European Union's second-largest exporter after France, cash premiums in Hamburg were little changed, underpinned by a lack of farmer selling in some regions.
Standard wheat with 12 percent protein content for January delivery was offered for sale unchanged at 0.5 euros over the Paris March contract. Buyers were offering 0.5 euros under. "Farmers are not willing sellers at the low outright prices caused by the fall in Paris in some regions especially around Berlin," one German trader said. Increased sales offers of Polish wheat in parts of Germany was noted partly because of favourable exchange rates.