MercoPress. South Atlantic News Agency

Record wheat prices on possible Russian shipments curb

Wheat rose to a record in Paris on Monday as traders speculated that Russia could curb shipments to restrain domestic food prices. Moscow has formed a working group that will consider measures to curb grain prices, which may include sales from state inventories as well as export duties and quotas.

The group is made up of officials from the Agriculture Ministry, the Grain Union and the Flour and Cereal Producers' Union, a ministry spokeswoman said Monday, declining to be identified by name because of ministerial rules. The group will propose measures by the middle of the month, including possible export restrictions, she said. Russia is the world's fourth largest exporter of wheat. The group may also suggest export duties and quotas, Sergei Shakhovets, head of the information and analytics department at the Grain Union, said. The union consists of the nation's biggest grain producers and traders. Agriculture Minister Alexei Gordeyev two weeks ago said the government may sell some of its 1.5 million tons of wheat reserves. Prices have risen 70% this year. Drought in the country's main wheat-producing regions of Rostov, Volgograd and Orenburg may cut production by 3.2% to 44.3 million metric tons this year, according to the U.S. Department of Agriculture. Year-end inventories may drop to a five-year low of 2 million tons, the department said in an August 21 report. The USDA forecast a 3.8% decline in Russian wheat exports, to 10.1 million tons. "The election year in Russia makes government policy, including possible tariff or quota regulation of grain exports, less predictable than ever," the USDA said in its report. A spokesman for the Kazakh Agriculture Ministry said the Central Asian country planned to introduce licenses "soon" for grain exports to reduce speculative trading. Ukraine another former Soviet republic and the world's eighth-biggest wheat exporter, is already restricting exports after drought cut its grain harvest to 30 million tons, its smallest since 2003, according to the Agricultural Ministry. The situation has spurred importers such as the world's biggest buyer after Brazil, Egypt which bought 10 times more wheat last month than it did a year earlier, in anticipation of higher prices, according to the country's General Authority for Supply Commodities. India also announced Monday it may buy 795,000 metric tons at 384 to 397.45 US dollars a ton, more than the 530,000 tons offered by suppliers last week, according to a government official in New Delhi. The U.S. is the world's biggest wheat exporter, followed by Canada and Australia, according to the USDA.