A hot, dry summer like never before in the history of the United States, Russia and Eastern Europe has led to lower yields for the global production of corn and wheat. Now, Ukraine announced its intent to ban wheat exports from mid-November.
Friday, wheat futures for December delivery rose 0.5 percent to settle at $8.725 a bushel at 2 p.m. on the Chicago Board of Trade. The price has gained 34 percent this year and rose 1.8 percent this week.
“There will be a halt on wheat exports starting November 15,” said Jorge Zukoski, president of the American Chamber of Commerce in Ukraine. It was however unclear whether the November 15 cut-off point would apply to the signing of export contracts or would mean an immediate halt to physical shipments of wheat. The wheat harvest was down by a third this year because of bad weather, and grain traders, suspecting an imminent curb on exports, have been rushing to speed up shipments abroad.
The wheat situation in the rest of the world is not improving either.
During the past week, drought conditions have improved slightly across the U.S., but the majority of the lower 48 states continue to suffer from what is proving to be a widespread and pernicious drought event, according to the latest U.S. Drought Monitor statistics, released on Thursday. The drought put a major dent in the U.S. corn and soybean crop, and now it is delaying the emergence of winter wheat, which is grown in some of the hardest-hit drought states, such as Nebraska, as shown on the below U.S. Drought Monitor from last week.
Russia‘s wheat crop is down more than a quarter from last year as the harvest nears completion, with the country’s main grain stocks far below 2011 levels but inventories near big population centers less depleted, government data showed on Friday. Russia reaped 39.5 million tonnes of wheat by October 19 with the wheat harvest 99 percent complete, a 32 percent decline in the harvest from the previous year.