Wheat Prices Jump to Highest Since May as Russia Slows Shipments

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As the ruble’s collapse increases domestic costs for bread, Russia is taking steps to stem its grain shipments and sending wheat prices in Chicago to the highest since May.

The nation is slowing down shipments by denying certificates that grain sellers and buyers need after sanitary inspections, a grain-export lobby said yesterday. The country’s “main goal is to replenish the domestic market,” Deputy Prime Minister Arkady Dvorkovich’s spokeswoman, Aliya Samigullina, said by phone from Moscow today.

The fight to ease gains for food prices comes as Vladimir Putin warned today that the nation’s economic crisis could drag on for two years. Wheat futures in Chicago surged 13 percent this month, heading for the biggest gain since March. Russia is the world’s fourth-biggest exporter.

“They want to keep the domestic food supply cheap,” Joe Vaclavik, the president of Standard Grain Inc. in Chicago, said in a telephone interview. “A lot of this run-up in the wheat market is speculative in nature. Uncertainty and fear is a big thing in these markets sometimes.”

Wheat futures for March delivery rose 1 percent to close at $6.5525 a bushel at 1:15 p.m. on the Chicago Board of Trade. Prices earlier touched $6.77, the highest for a most-active contract since May 20.

“It’s a panic move,” Thibaud Amate, an analyst at Horizon Soft Commodities in Noisy-le-Grand, France, said by phone. “No one has any idea what’s happening. If there was any official declaration, wheat would probably fall.”

‘Covert Form’

The nation is denying certificates for grain destined for countries other than Egypt, Turkey, India and Armenia, according to a letter from the National Association of Exporters of Agriculture Products, addressed to Deputy Prime Minister Arkady Dvorkovich. The trade group called the move a “covert form” of export restrictions.

Russia has also said it may scrutinize shipments through offshore companies, and the nation’s agriculture watchdog said last month it will block outbound cargoes deemed contaminated. The ruble this week weakened to an all-time low against the dollar.

In 2010, a drought slashed Russia’s domestic harvest and spurred the nation to issue a ban on shipments. Wheat prices surged 47 percent that year.

“It’s definitely the talk around the market in Russia which is driving the prices,” Stefan Vogel, head of agricultural commodity markets research at Rabobank International, said by phone from London. “There’s still a lot of uncertainty about how and if Russia will restrict exports.”

UN Outlook

The price jump may be short-lived, with world grain supplies forecast at a 15-year high by the end of the season, and Russia having completed a large part of its export program, according to Abdolreza Abbassian, a senior economist at the United Nations’ Food & Agriculture Organization.

“There’s so much grain available that probably it will give some short-term price support, but not long-term,” Abbassian said by phone from Rome yesterday. “Russia is adding volatility rather than setting a trend.”

Corn futures for March delivery rose 0.7 percent to $4.11 a bushel in Chicago. Soybean futures for March delivery advanced 0.8 percent to $10.4325 a bushel.

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