Meteorological and political considerations once again boosted the price of wheat on Tuesday, as Ukraine set export quotas for both barley and wheat. Bloomberg News reported that the quota for barley will be likely be 1 million tons from September 1 to December 31, while wheat’s limit will be 1.5 million tons.
Last year, the nation exported 5 million tons of wheat and 2.26 million tons of barley, Ukrainian commodity researcher ProAgro told Bloomberg.
On the Chicago Board of trade, wheat futures climbed 0.72 percent to 701.25 cents per bushel. Corn futures also gained, climbing 0.59 percent to 425.25 cents per bushel. Soybean futures rose 0.29 percent to trade at $10.345 per bushel.
“Ukraine can export up to 15 million tons of grain this marketing year,” Nikolay Vernitsky, director of ProAgro, told Bloomberg. “It is not an issue of shortage of grain. The issue is that the government wants to limit exports through quotas to put pressure on domestic grain prices and push them down.”
The former Soviet republic is following its neighbor’s lead; Russia banned all grain exports on August 15 for the rest of the year, in response to a devastating drought which has seared the harvest in the Black Sea region. Kazakhstan has also been suffering from the extraordinarily hot and dry weather.
On the other side of the globe, weather conditions in the United States led many to worry about the state of the U.S. harvest. “Corn got a boost from U.S. crop weather concern: hotter and drier in the southern Midwest, while there was higher precipitation in the north,” Hiroyuki Kikukawa, general manager of research at IDO Securities, told the news service. “This would reduce yields and lead to a cut in production amid increasing demand.”
Wheat prices hit the highest levels in nearly two years on August 6, though futures have come down a bit since then.
It’s still unclear how far short of demand supply will fall without Russia’s exports, or whether there will be any shortage at all. Russia says it has sufficient grain reserves to cover its own needs. The Russian wheat crisis has spilled over into other grains, raising the prices of most key food commodities.
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