Wheat prices rising as drought-stricken Russia bans grain exports

Wheat prices have been going up with the drought in Russia making grain exports no longer allowed. The ban on Russian grain exports removes a major supplier other countries have depended on. A global grain shortage is the concern of most people as Russia tries to control domestic prices inside their country. Food costs going up won’t help central bankers in trying to stop inflation from happening with the global economic recovery. Post resource – Wheat prices rising as drought-stricken Russia bans grain exports by Personal Money Store.

Wheat prices expected to rise further

Russia banned exports making wheat futures explode to the max amount allowed on the Chicago Board of Trade (CBOT). As outlined by the Associated Press, wheat prices went up 8 percent to $ 7.8575, which is 60 cents higher, Thursday after trade opened. Since August 2008, this is the highest wheat has been. There was a global food crisis in February 2008 which caused wheat to go up to $ 13.495. Prices are allowed to rise 60 cents a day but can rise 60 cents another day for the CBOT. The price of wheat has soared since early June, and notched its biggest monthly gain in July in at least 51 years.

Crops shrivel from drought

In 50 years, Russia hasn’t seen a drought this bad. Since June 9, Chicago wheat prices have gone up 92 percent considering all the things happening like the drought in Russia, Dry weather in Kazakhstan and European Union, as well as flooding in Canada making for ruined crops, reports Bloomberg. Sugar beets, potatoes and corn are all also in danger with the drought. Russian Prime Minister Vladimir Putin told a government meeting in Moscow that halting Russian grain exports would contain domestic prices that gained 19 percent last week, faster than at the peak of the 2008 global food crisis.

New predictions on wheat production

Global wheat supply concerns are also increasing prices for other grains. The Wall Street Journal reports that September corn futures in Chicago rose 6.2 percent. There was a 2.7 percent increase on rough-rice futures. As outlined by the Food and Agriculture Organization, the global wheat production estimate is now only at 651 million metric tons for 2010. 2008’s situation is nevertheless much worst. During the 2007-08 wheat crisis, stockpiles were estimated there to be 124 million tons in storage, but now it is estimated we have 187 million metric tons in storage. The U.S. Department of Agriculture hopes to have a 23 year high within the making by having 30 million tons stored within the U.S. alone by the end of May 2011. Within the 2007-08 crisis, an all time low was hit with 8.3 million tons in inventories in the U.S..

Additional reading

Associated Press

google.com/hostednews/ap/article/ALeqM5hLdQzzkk_vLW3OsMLzbo-eZnRKbAD9HDDAN80

Bloomberg

bloomberg.com/news/2010-08-04/wheat-surges-to-22-month-high-on-russian-drought-corn-soybeans-advance.html

Wall Street Journal

online.wsj.com/article/BT-CO-20100805-716053.html