Wheat Heads for Biggest Gain in Half a Century on Export Bans
August 6th, 2010Via: Bloomberg:
Wheat headed for the biggest weekly gain in half a century on concern other countries may follow an export ban by Russia, and may reach $10 a bushel, a price not seen since the global food crisis in 2008.
Russian Prime Minister Vladimir Putin said Kazakhstan and Belarus should also suspend shipments as Russia announced a ban on grain exports from Aug. 15 to yearend. “It’s got $10 written all over it,” said Peter McGuire, managing director at CWA Global Markets Pty, who on Aug. 3 correctly forecast the surge to $8.50. Wheat was last at $10 in March 2008, and a gain to that price would be up 23 percent from yesterday’s close.
Russia’s ban may benefit rival producers, including the U.S., the largest exporter, Australia and Argentina, according to Rabobank. Wheat prices have doubled in less than two months as drought slashed the harvest in Russia, the third-largest grower, and rains cut Canadian output. The surge may herald a new food crisis as corn and other staples jump, said a trade group from Indonesia, Asia’s top wheat buyer.
“This situation is reminiscent of the irrational moves already seen in the past, for example at the start of 2008,” Bourges, France-based farm adviser Offre et Demande Agricole said in a comment today. “It’s always very hard to say where prices can end up in such conditions.”
