Wheat futures traders have had a dramatic ride over the past few months, as the grain surged from about $5 per bushel in early June and July to as high as $8 per bushel in August. Fears grew of a global shortage caused by the devastating drought and fires which seared the Russian crop and caused prime minister Vladimir Putin to announce a nearly complete ban on the export of grain until the end of 2011.
Wheat rose again today, with December wheat futures rising 1.4 percent to $7.28 per bushel on the Chicago Board of Trade. Overall, wheat futures are up nearly 60 percent this year.
Australia is predicting a drop in its harvest for this year; the Grain Industry Association of Western Australia predicted that the region will produce just 4.473 million metric tons of the grain, down from a previous forecast of 5.486 million tons. Last year, the same region yielded 8.248 million tons of wheat.
Australia is a key breadbasket for the global markets, and its dry weather is not helping it to meet the surge in demand caused by Russia's ban. Emerging market nations like Egypt, which previously relied on Russian exports to meet domestic demand, are turning to new suppliers and helping sustain the soaring price of grain.