European wheat futures dropped on Monday, in line with Chicago. This was a technical setback following last week's rally which was fueled by fears over Black Sea supply.

The December wheat price on Paris' Euronext fell 2% to 220.50 euro ($245.33) per metric ton. This is a drop from the previous month's high of 228.00 euro.

Chicago wheat fell around 3% on Friday, pulling back from its near three-month peak.

Traders said that both markets were lacking in fresh news to test the chart resistance levels after Friday's highs.

A futures dealer stated that "there's nothing happening special in the rally, apart from technical fatigue."

Last week, wheat markets rose as a combination of adverse weather and rising tensions internationally over Russia's conflict with Ukraine stoked fears about the supply of grain in this vital Black Sea export area.

The news that a grain ship had been attacked by a missile after leaving Ukraine was unsettling to traders. Kyiv has blamed Russia for the incident.

On Monday, the lack of any further escalation and confirmation of rapid Black Sea cereal exports helped to calm fears.

The agriculture ministry reported on Monday that Ukraine's grain exported in 2024/25 season July-June reached 8,7 million tons. This is up from 5,9 million tons one year earlier.

Estimates from the consultancy Sovecon show that Russian wheat exports are expected to continue strong in September despite a drop from August's record-breaking high.

Analysts report that the Russian wheat export price was little changed in the past week. The 12.5% protein crop is mostly sold below $220 per ton, free on board. This highlights Russia's advantage over other countries after the recent rally of western Europe and America.

A Statistics Canada survey predicted that wheat production would rise by 4% in Canada this year.

The rain forecast for the Plains of the United States in the coming week could also help ease the dryness that is preventing winter wheat from being planted.

A global surplus of food has distracted attention from the rain-damaged harvests in Europe, which include the smallest French crop seen since the 1980s. ($1 = 0,8988 euros) Reporting by Gus Trompiz Editing Marguerita Choy

(source: Reuters)