Wheat rose in Chicago after Russia, the world’s third-largest grower, extended a ban on grain exports into next year, raising the prospect of higher food prices that already have sparked riots in Mozambique.
Wheat for December delivery rose as much as 1.5 percent to $7.2475 a bushel, advancing for a third day and taking this week’s gain to 4.3 percent. Russia, suffering from its worst drought in at least a half century, started an export ban Aug. 15 that was scheduled to end Dec. 31. Prime Minister Vladimir Putin said yesterday it wouldn’t be reviewed until after the next harvest and Agriculture Minister Yelena Skrynnik said Russians are hoarding staples.
“Russia was for the last couple of seasons a very large part of the world export market and now all of sudden they disappeared,” said Keith Flury, a grains analyst at Ratzeburg, Germany-based F.O. Licht. “This is kind of the new fundamental shift that not everybody was really ready for.”
Wheat traded in Chicago, a global benchmark, as much as doubled since June as Russia’s drought, flooding in Canada and parched fields in Kazakhstan and the European Union ruined crops. Higher prices, combined with rallies in corn, rice and livestock, are increasing concern of a return to the food crisis of 2008, which sparked riots from Haiti to Egypt.
Residents of Mozambique’s capital, Maputo, were on strike for a second day yesterday in a protest over higher food and utility prices. At least seven people have died in clashes with police and another 280 injured, Cabinet spokesman Alberto Nkutumula said yesterday.
While prices have jumped, they’re still a long way off the peaks reached in 2008. Then, wheat reached a record $13.495 and rice rose as high as $25.07 per 100 pounds in Chicago. Rice for November delivery closed yesterday at $11.43. A United Nations’ index of 55 foods rose to 175.9 points last month, 18 percent below the 214 points recorded in June 2008. The world’s poorest nations will spend 37 percent less on cereal imports this year than at the peak, according to the UN.
World wheat stockpiles are expected to be 174.8 million metric tons in the 2010-11 season, comprised of local marketing years, according to the U.S. Department of Agriculture. That’s 40 percent more than in 2007-08.
Wheat for December delivery was 8.5 cents, or 1.2 percent, higher at $7.2225 a bushel on the Chicago Board of Trade, as of 12:15 p.m. in London. Prices rose as high as $8.68 Aug. 6. Milling wheat futures for November delivery climbed 0.5 percent to 230.75 euros ($296) a metric ton on NYSE Liffe in Paris.
Corn for December delivery rose 0.1 percent to $4.48 a bushel, after earlier reaching $4.49, the highest compared with intraday prices since June 2009. Soybeans for November delivery advanced 0.7 percent to $10.165 a bushel. Rice for November delivery gained 0.9 percent to $11.53 per 100 pounds.
Russia produced 61.7 million tons of wheat last year, the largest crop after China and India, according to the International Grains Council.
The United Nations’ Food and Agriculture Organization will hold a special meeting of its intergovernmental groups on grains and rice on Sept. 24 in Rome.
Russia accounted for 14 percent of the global exports of wheat, flour and related products in the year to June 30, according to the USDA. “We can only review lifting the ban on grain exports after the next year’s crop is harvested and we have clarity on the balances,” Putin said in Moscow yesterday.
“So far we are not declaring any crisis, it’s premature,” Abdolreza Abbassian, senior grains economist at the FAO, said. “But we are not saying it’s not a tight situation. It’s a very tight situation.”
Speculators including hedge funds increased their net-long position, or bets on higher prices, in Chicago wheat futures by 9.9 percent in the week ended Aug. 24, according to U.S. Commodity Futures Trading Commission data.
World wheat production will reach 645.7 million tons in the 2010-11 season, the USDA said last month, reducing its previous forecast of 661.1 million tons.
Germany’s grains harvest fell 12 percent to 43.8 million tons this year after “extreme weather,” the country’s Agriculture Ministry said today.