Tags: EU | Russia | Wheat

Russia Bans Grain Exports for Rest of Year Amid Drought

Thursday, 05 Aug 2010 09:45 AM

Russia banned grain exports for the rest of the year on Thursday after a severe drought destroyed 20 percent of its wheat crop. The move caused the price of wheat, which has jumped 70 percent this summer, to rally further.

Russia, which is among the largest exporters of grain and grain products, said the ban will run from Aug. 15 through Dec. 31.

Fears that it would cut supplies had already driven up prices and wheat futures were up another 8.3 percent on the Chicago Board of Trade.

Prime Minister Vladimir Putin announced the ban at a Cabinet meeting on Thursday, saying it was necessary even though Russia has sufficient reserves.

"We need to prevent a rise in domestic food prices, we need to preserve the number of cattle and build up reserves for the next year," he said during the televised meeting. "As the saying goes: reserves don't make your pocket heavy."

Russian farmers have little incentive to export anyway. Even though grain prices have been rising on world markets, they have been growing even faster in Russia.

The majority of the damage to Russia's wheat crop has been caused by the drought, one of the worst in decades as much of the country suffers through the hottest summer since record-keeping began 130 years ago. But wildfires raging through much of western Russia have spread into farmland and there are fears that more fields will be lost.

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Russia banned grain exports for the rest of the year on Thursday after a severe drought destroyed 20 percent of its wheat crop. The move caused the price of wheat, which has jumped 70 percent this summer, to rally further.Russia, which is among the largest exporters of...
EU,Russia,Wheat
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2010-45-05
 

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