Russia has announced a momentary ban on grain exports from August 15 to December 1 in response to the worsening drought.
Global wheat prices have jumped on Thursday after Russia announced that grain exports would be stopped from August 15 to December 1 after the worst drought in 50 years has triggered a major decrease in forecast wheat production.
Grain prices have jumped up due talk about a Russian export ban coming in, as we have seen today, but also other major producers such as Ukraine and Kazakhstan dipping their harvest forecast. The general forecast of the Grain Union ruins at 70-75 million tonnes this year, but the restriction on grain exports perhaps reflects a review of the forecast. If the grain crop remains near 70 million tonnes, the domestic market is not likely to face any shortfall and the domestic prices will slow down.
Regional demand for the grain in the intervention fund has been increasing each day, and according to the data from the Ministry of Agriculture has previously now exceeded the real grain supply in the fund.
However, according to the latest news numerous major producers have managed to sell grain to Egyptian importers and have signed futures contracts with Jordan importers on C&F terms to be delivered in September. We believe that another reason to introduce constraint on exports was a recent appeal by Glencore International SA to ban export from Russia so that to avoid default on grain market on contract obligations
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