Russia Bans Grain Exports After Drought Shrivels Crop.

[elleng]

Source: nyt

Russia announced Thursday that it would ban grain exports through the end of the year, a response to a scorching drought that has destroyed millions of acres of Russian wheat and hobbled the country’s agricultural revival.

The ban on grain exports by Russia, one of the world’s largest wheat producers, helped propel wheat prices in the United States toward their highest levels in nearly two years and raised the prospect that consumers could pay more for products like flour and bread as Russia tries to conserve its supplies of wheat, barley and other grains for its own people.

In announcing the ban, which is in force from Aug. 15 to Dec. 31, Prime Minister Vladimir V. Putin said that Russia had sufficient stockpiles of grain but that blocking exports was an appropriate response to the worst drought in decades.



Read more: http://www.nytimes.com/2010/08/06/world/europe/06russia.html?_r=1&hp

[Arctic Dave]

1. This does not sound good at all.

[Ghost Dog]

3. The International Grains Council doesn't foresee any global supply problem,

but I'm sure the speculators will be allowed to have their way.

Heightened market concerns about the outcome of this year’s harvests in some key northern hemisphere exporters, especially wheat and barley in the Black Sea region, propelled prices of grains and oilseeds upwards in July. ... Milling wheat export quotations in the EU and the Black Sea region climbed by around $70 per ton in response to reports of significant drought-induced yield losses in some areas, with markets also speculating about possible export restrictions in Russia and Ukraine. However, substantial new wheat sales were still being recorded from those countries.

Wheat futures in the US reached their highest levels in over a year, with considerable speculative activity, but export values nevertheless became increasingly competitive against other origins, with this year’s ample availabilities likely to spur a sharp recovery in foreign sales. US maize futures, having initially slumped to nine-month lows at the end of June, climbed steeply in early July in response to somewhat reduced US supply forecasts and the rally in wheat, but the gains over the period as a whole were quite modest, reflecting the generally favourable crop outlook... Ocean freight rates for grains and other dry bulk cargoes fell further in July although there were recent signs of increased chartering activity.

GRAINS* OUTLOOK FOR 2010/11

Prospects for the next grains crop have been significantly affected by the past month’s adverse conditions in parts of the Black Sea region, the EU and Canada. Total wheat and coarse grains production is now forecast 23m. tons lower than before, at 1,753m., down from the previous year’s near-record 1,782m. The impact has been mainly on northern hemisphere wheat and barley crops, lowered by 13m. and 7m. tons, respectively, with little change in the maize figure. The reduced crop prospects have prompted a downward revision in the feed use forecast, with global consumption now projected to rise by only 0.8%, to 1,774m. tons; increases in industrial and food use will outweigh a reduction in feed use.

With the global crop forecast cut by more than consumption, world carryover stocks of grain in 2010/11 are placed 18m. tons lower than before, at 369m. This is 21m. tons less than the estimated 2009/10 carryover but broadly similar to the year before. World trade in grains in 2010/11 (July/June) is forecast at 234m. tons, almost unchanged from June, with the crop problems in recent months mainly affecting exporters rather than importing countries. The forecast is only slightly under last year’s 235m. tons and well below the 2008/09 record of 249m. Trade in wheat is forecast to decline by some 4m. tons, but maize is set to rise by almost the same amount. Offsetting the expected reductions in exports by Russia and Ukraine are significant increases in shipments forecast for the US and Argentina, with global availabilities remaining ample.

- IGC Grain Market Report - http://www.igc.int/en/Default.aspx

[Robbien]

4. That doesn't stop the gamblers in the casinos from betting up the prices

Wheat prices soar. Are bread prices next?
http://money.cnn.com/2010/08/05/news/economy/wheat_prices/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

NEW YORK (CNNMoney.com) -- With wheat futures soaring to their highest level in two years, you could soon find yourself paying more for a loaf of bread at your local grocery store.

The price of wheat has surged more than 80% from its seven-month low in June. Prices continued to rally Thursday, surging to their highest level since August 2008, after Russia said it would ban grain exports until Dec. 1 due to a drought that has destroyed more than 20% of its wheat crop.

If prices continue to surge, you could wind up paying 25% to 30% more for a loaf of bread and at least 10% more for a pizza by the end of August or early September, said Darin Newsom, a senior analyst at Telvent DTN, an agriculture and commodities information company.

That would translate into a price hike of as much as 90 cents more for a $3 loaf of bread, and a bump of $1.40 for a $14 pizza.

--------


Wall Streeters always out to make a bad situation worse for the rest of us.

[breadandwine]

2. But but but but -- there's no such THING as global warming!

Russia is cool! In fact, they have very frigid winters!


Global warming is a Fig Newton of your imagination!



But on a lighter note, this reassuring news flash just came in:



Flash Bulletin 2020!

Germany, having restored Naziism in order to implement fiscal austerity, just announced that, after building nuclear missiles it was preparing a land invasion of Russia, now that Russia no longer has severe winters that would stop an invasion from the west. "Vee vill also be drilling for za oil in za arctic, now zat zair is no longer a polar ice cap," said Berlinischist von Deutchtinkel, Germany's new defense minister.

[cory777]

5. Russia, Crippled by Drought, Bans Grain Exports

Source: NY Times

MOSCOW — Prime Minister Vladimir V. Putin on Thursday banned all exports of grain after millions of acres of Russian wheat withered in a severe drought, driving up prices around the world and pushing them to their highest level in two years in the United States.

The move was the latest of several abrupt interventions in the Russian economy by Mr. Putin, who called the ban necessary to curb rising food prices in the country. Russia is suffering from the worst heat wave since record-keeping began here more than 130 years ago.

“We need to prevent a rise in domestic food prices, we need to preserve the number of cattle and build up reserves for next year,” Mr. Putin said in a meeting broadcast on television. “As the saying goes, reserves don’t make your pocket heavy.”

During his years as president and prime minister, Mr. Putin has never hesitated to marshal the power of the state to protect Russian economic interests, and this decision showed that this has remained his prerogative even after he stepped down as president.

Read more: http://www.nytimes.com/2010/08/06/world/europe/06russia.html

---

Breaking Uncensored News!!! http://activistnews.blogspot.com

[aquart]

6. Exactly what he needed to do.

[Odin2005]

7. But, but, but... FREE TRADE!!!

They should starve just like the Irish did, the Market Gods demand it!!! :sarcasm:

[DeSwiss]

8. +1000 n/t

[dipsydoodle]

10. That just affects pricing

Doesn't it ? I don't think it has any bearing on supply.

[Odin2005]

11. Read up on the Irish Potato Famine.

The Brits were using Free Trade ideology during that horror.

Oh, and price is a reflection of supply relative to demand, it is a form of rationing based on ability to pay.

[dipsydoodle]

12. That is a wholly unrelated subject

The potato famine was caused by a blight at a time when all potatoes there were of the same variety. The solution, although unknown at the time , was simply to plant a different variety.

[robcon]

13. I think you have it wrong about the Potato Famine.

They talked Free Trade, but then dumped corn from America on the Irish market in 1847. The howl from grain producers at lowered demand was heard, and all imports were banned after that.

The Irish were net EXPORTERS of food for every year of the famine, but the peasant subsistence farmers (one-third of the Irish were sharecroppers whose rent was in a portion of their crops, not in cash) could not afford the food because they were not a part of the cash economy. The Irish were net exporters (livestock, oats and wheat) every year of the famine except 1847.

[Ghost Dog]

9. Egypt's recent tender will have set the latest prices:

CAIRO/CHICAGO (Reuters) - Egypt's main government wheat buyer issued an international wheat tender on Friday amid a severe drought in the Black Sea region, which has slashed production there and sent global prices soaring this month.

Wheat traders will be eagerly awaiting results of the tender, including information on origins and prices offered, to provide a glimpse into the minds of major sellers of wheat and the world's top importer.

...

Nomani Nomani, vice chairman of GASC, said he was seeking cargoes of U.S. North Pacific soft white wheat, U.S. hard red wheat, U.S. soft red winter wheat, and/or Canadian soft wheat. GASC was also seeking cargoes French milling wheat, Australian standard white wheat, Australian hard wheat, German milling wheat, Argentine bread wheat, Russian milling wheat, Kazakhstan milling wheat, Romanian wheat and/or UK milling wheat (ukp or uks variety).

The worst drought in decades in the Black Sea region has slashed wheat production in Ukraine, Kazakhstan and Russia, the region's top producer and exporter.

/... http://af.reuters.com/article/investingNews/idAFJOE66U03X20100731

(& see International wheat production statistics to 2007: http://en.wikipedia.org/wiki/International_wheat_production_statistics )

[elleng]

14. Very interesting; thanks, Dog.