Wheat prices on Thursday fell to a six-month low after Ukraine, one of the world’s largest exporters of the grain, cut back its restrictions on exports.

Ukraine’s return to the global market came on top of prospects of a bumper crop in breadbasket areas such as the Black Sea basin, Canada and the European Union, prompting some analysts to say the worst of the wheat price inflation was now over.

In Chicago, wheat prices fell to $8.04½ a bushel, the lowest level since November and 40 per cent below the $13.49½ a bushel record set in February. In Paris, milling wheat dropped to €187.25 a tonne, the lowest level since July.

However, wheat prices remain 70 per cent above their level a year ago and well above their historical average of $3-$4 a bushel. Executives from the food industry said it was unlikely consumers would benefit soon from the drop in wholesale costs as bread companies had not yet passed on previous price increases.

Ukraine said it would allow exports of 1.2m tonnes in the next two months, up from a previous quota of just 200,000 tonnes.

Sorin Vaslobal, of Paris-based cereals broker Plantureux, said Kiev’s decision could trigger a domino effect. “We see Ukraine’s move as applying pressure on Russia to remove its 40 per cent export tax,” he said. Argentina and Kazakhstan have also restricted their wheat exports.

The International Monetary Fund and the World Bank have asked agriculture commodities exporters to scrap or at least ease their foreign sales restrictions.

The International Grains Council on Thursday said the global wheat crop will hit a record 645m tonnes this year, up from 603.5m tonnes in 2007, as weather improves and farmers sow more wheat at the expense of crops such as corn. Luke Chandler, a cereal analyst at Rabobank in Sydney, said: “Wheat prices are expected to ease in the second half of 2008 as a potential record-breaking world wheat crop looms.”

The fall in wheat prices was not mirrored in other crops, with rice prices surging to a fresh record. Brazil, a small rice exporter, yesterday joined Vietnam, China, India, Egypt and Cambodia in restricting rice exports.

Traders in Bangkok quoted indicative prices for Thai medium-quality white rice, the global benchmark, slightly above $1,000 a tonne, but they noted that some exporters had offered rice at a record high of $1,300 a tonne at Japan’s regular tender. Tokyo turned down the offers, leaving the market uncertain of the true price level.

Additional reporting by Jenny Wiggins in London

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