Wheat tumbled the most in a week after Russia, once the second-biggest exporter, said it will allow grain shipments to resume after a 10-month ban.
Russia won’t extend beyond July 1 its grain-export ban, implemented in August after the worst drought in 50 years slashed production, Prime Minister Vladimir Putin said May 28. Wheat prices have gained 75 percent in the past year.
Wheat futures for July delivery dropped 17.5 cents, or 2.1 percent, to $8.0225 a bushel by 1:15 p.m. London time on the Chicago Board of Trade. The price, which earlier fell 4.4 percent, was little changed for the month. Milling wheat for November delivery gained 0.8 percent to 240.75 euros ($346.51) on NYSE Liffe in Paris.
The price still may gain on declining stockpiles as dry weather in Western Europe and the U.S. southern Plains curbs production of winter wheat and as wet weather in northern states delays planting of spring varieties, Adams said.
“The market may be setting itself up for a bear trap because inventories are still quite low and we are not sure how much wheat Russia will put on the market,” Adams said.
Farmers worldwide will reap 667 million metric tons of wheat in 2011-2012, trailing demand of 669 million tons, the International Grains Council said May 26. The agency pared its production estimate from 672 million tons in April, cutting stockpiles to 185 million tons, the lowest since 2008-09.
Grain plantings in Russia climbed 10 percent to 24 million hectares (59 million acres) and the government has more than 6 million tons in reserves, according to First Deputy Prime Minister Viktor Zubkov. Russia can export 2.5 million tons a month, said Arkady Zlochevsky, president of Russia’s Grain Union.
Russia will export 10 million tons of wheat in the 12 months ending June next year, up from 4 million tons in the current year, according to the USDA. That’s less than the 18.6 million tons sold a year earlier.
The quality of export grain in Russia needs to be clarified, said Wayne Gordon, an analyst from Rabobank International in Sydney.
“Whether the grain they’ve got in stocks is actually of the quality that can be exported is another debate,” he said.
Corn for July delivery gained 1.5 cents, or 0.2 percent, to $7.60 a bushel in Chicago, leaving prices up 0.5 percent this month. July-delivery soybeans gained 1 cent to $13.8075 a bushel and were set for a second monthly decline.