MercoPress. South Atlantic News Agency

Wheat climbs as Russia extends ban on exports until next year’s crop

PM Putin said the decision will give the market “predictability”

Wheat climbed after Russia, the third-largest grower last year, extended a ban on exports into next year following a drought destroyed crops, tightening global supplies. The United Nations’ Food and Agriculture Organization called a special meeting to address the global grains situation.

The December-delivery contract gained as much as 0.5% to $7.17 a bushel in Chicago, after surging as much as 2% Wednesday when Prime Minister Vladimir Putin announced the extension. Russia accounted for 14% of exports of wheat, flour and related products in the year to June 30, according to the U.S. Department of Agriculture.

Russia’s longer ban may contribute to higher global inflation. World food prices rose in August to the highest since September 2008, the FAO said on Aug. 31. That’s the highest level since surging costs of rice and wheat triggered riots in poorer states amid concern that there was global food crisis.

Russia will extend the ban on grain and flour exports at least until next year’s crop are harvested, Prime Minister Putin said Wednesday. The initial ban, announced on Aug. 5, was implemented from Aug. 15 and had been set to lapse on Dec. 31. Its announcement drove wheat futures to 8.68 a bushel the next day, the highest price in 23 months.

“We can only review lifting the ban on grain exports after the next year’s crop is harvested and we have clarity on the balances,” Putin said in a government meeting in Moscow. Extending the export restrictions will add “predictability” to the market, Putin said.

World wheat production will fall 5.1% to 646 million metric tons this year on the Russian drought, from 681 million tons in 2009, the Rome-based FAO said Sept. 1 as the agency also reduced the outlook for overall grains production.

Russia’s government has forecast that this year’s harvest may be slashed by as much as 38% as the worst drought in at least half a century parched crops. The nation’s harvests are typically completed in November.