Russia and Kazakhstan have warned that bad weather will reduce the size of their grain crops this year, adding an additional supply worry to already stressed global agricultural markets.
Prices for food staples, including corn, soyabeans and wheat, have rallied sharply on the back of the most damaging US drought in at least a quarter of a century.
But droughts in some grain-growing regions together with flooding in others have also cut crop forecasts in the former Soviet Union breadbaskets of Russia, Kazakhstan and Ukraine.
On Tuesday, Russia’s agriculture ministry cut its forecast for grain production from 85m tonnes to a range of 80m-85m tonnes. The ministry played down its decision to lower its estimate, saying: “The figures are constantly being revised.”
But while not as severe as the US drought, traders fear that the crop difficulties in Russia, the world’s third-largest exporter of wheat, could put additional upward pressure on prices.
Benchmark front-month Chicago wheat futures on Tuesday rose to a four-year high of $8.985 a bushel, above the peaks touched in the wake of Russia’s 2010 export ban and up 47 per cent in a month.
Soyabean futures hit a record high last week, and on Tuesday were trading at a near record $16.40 a bushel, while corn prices were also trading within a few cents of a record high of $8 a bushel.
The Russian agriculture ministry also cut its grain exports forecast to 16m tonnes of grain from an earlier forecast of 16m-18m tonnes. Some traders expect Russia to export only 7m tonnes of wheat, compared with a US government forecast of 12m tonnes and 21.3m tonnes of exports last year.
In Kazakhstan, meanwhile, Muslim Umiryayev, deputy agriculture minister, told reporters that the country faced an “alarming” drought that would reduce grain output by 48 per cent compared with last year’s record crop, according to Reuters. Kazakhstan is traditionally the world’s sixth-largest exporter of wheat.
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