Russia has announced a temporary ban on wheat exports. This is of course not entirely unanticipated.
Today, soon after the Russian Prime Minister reportedly announced a temporary grain export ban, prices were seen rising further.
Drought conditions have threatened Russian wheat harvest.
From record 63.7 million tonnes in 2008-09, wheat production declined by two million tonnes the following year.
Drought is now threatening to pull output down to around 50 mt. Russia’s wheat exports were 17-18 mt last two years.
Winter plantings
As the harvest moves into areas most severely impacted by the acute dry conditions, soon the market can expect to get a clear idea about the quantum of output loss.
There are concerns about winter wheat plantings too.
Next week’s USDA monthly grain market report is keenly awaited.
While wet weather affected Canada and south eastern Europe planting, dry conditions have hurt production in Ukraine, Kazakhstan as also north-western parts of the EU.
Recently, the London-based International Grains Council reduced 2010-11 world wheat output forecast by 13 mt to 651 mt.
On current reckoning , further downgrades look certain. The rise is seen having a rub-off effect on corn and soyabean.
Bloomberg reports: Wheat for December delivery, the contract with the largest open interest, advanced as much as 7.9 per cent to $8.155 a bushel in Chicago on Thursday, the highest level since August 2008. The contract was 7.8 per cent higher at $8.1425. Wheat prices may continue rising till the end of August, said Mr Chris Yoo, manager of the global derivatives team at Samsung Futures Inc. in Seoul. Consumers are likely to switch to consume rice.
Wheat has jumped faster than in the first two months of 2008 when a 41 per cent gain to a record $13.495 spurred concern over a global food crisis and sparked riots from Haiti to Egypt.