(Adds closing prices, market positions data)
PARIS, March 22 (Reuters) - Euronext wheat fell sharply
on Wednesday to a new 18-month low, weighed down by short-term
supply pressure, bearish chart signals and volatility in
financial markets, dealers said.
The severity of this week's drop in wheat continued to
surprise participants, fuelling talk of large movements in
investment fund positions.
Participants were also awaiting a U.S. Federal Reserve
interest rate announcement later on Wednesday to gauge how
recent turmoil in the banking sector may shape policy decisions. May milling wheat on the Paris-based Euronext
settled 2.2% down at 248.00 euros ($267.59) a tonne, bringing
this week's decline to 6.6%.
Earlier, the contract dropped to 245.00 euros, the lowest
front-month price since Sept. 22, 2021.
Technical pressure increased after another chart gap was
created in opening trade, followed by breaching of the 250 euro
psychological floor, dealers said.
Chicago wheat also slid over 2% to hit a 20-month low. "There were reasons for prices to fall but now the market
doesn't know where the bottom is," a futures dealer said.
"It feels a bit like Chicago and Paris are chasing each
other."
Traders said the continuation of a wartime Black Sea export
deal and improved weather for U.S. and European crops eased
supply risks, though some considered the market was overlooking
the prospect of a sharp fall in Ukraine's 2023 grain harvest and
signs of late weather damage to India's crop.
In France, selling by farmers worried about further price
losses and facing storage deadlines to release 2022 crop to
cooperatives exacerbated the trend on Euronext, dealers added.
Euronext rapeseed extended losses to a new two-year low.
May futures fell as low as 418.75 euros, a weakest
front-month price since December 2020, as a surplus in
Europe hung over the market.
The contract settled down 2.4% at 430.50 euros.
Financial investors reduced their
net short positions
in Euronext wheat and rapeseed last week, data published by
the exchange said.
($1 = 0.9268 euros)
(Reporting by Gus Trompiz in Paris; Editing by David Gregorio)
Messaging: gus.trompiz.thomsonreuters.com@reuters.net))
