No Russian Grain Export Upside on U.S. Drought – Experts

Russian grain export volumes are unlikely to increase due to high domestic prices caused by the worst drought in the United States since 1956, experts polled by RIA Novosti said on Friday.

“[Russian grain export] could not increase when our internal prices are equal with international prices or even higher in some regions,” Russian Grain Union President Arkady Zlochevsky said.

The U.S. drought has pushed up global wheat, corn and soybean prices to highs not seen since 2008, with grain and oil-bearing crop prices rising sharply since mid-June.

Corn futures hit a record $8.16 a bushel on the Chicago Mercantile Exchange on Thursday, having spiked more than 55 percent since June 15, while soybeans touched $17.49 a bushel.

The drought forced the US government last week to cut its corn production forecast for this year to 12.9 billion bushels from an earlier June forecast of 14.8 billion, The Telegraph reported late on Thursday.

U.S. corn prices growth affects the crop prices in other countries, experts said. Russian wheat prices hit a record high of 8,800-8,900 rubles ($273-276) per ton in early July and reached 9,500 rubles ($296) in several regions this week, which could lead to an increase in fodder and meat prices.

“[Russian internal] prices have grown and now they are near to absolute maximum levels owing to drought in the United States,” Sovecon agricultural news agency executive director Andrei Sizov said.

Rising Russian wheat prices have also been buttressed by the recent forecast downgrade of Russia’s grain harvest from 94 million tons to 80-85 million tons and continued rains in the south of Russia. The Russian Agriculture Ministry has also downgraded its export forecast to 16 million tons from the 20 million tons previously expected.


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