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Drought ruins Russia wheat, US says no world crisis
Published on Fri, Aug 13, 2010 at 10:37 | Updated at Fri, Aug 13, 2010 at 12:05 | Source : Reuters
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As Russia faced drought losses on a quarter of its grain area and Pakistan feared floods had ruined half a million tonnes of wheat, the US government slashed world wheat crop estimates but said there was no global crisis.

The US Agriculture Department (USDA) reduced its forecast for the world wheat harvest by 2.3% on Thursday to 645.73 million tonnes in its August report, below the 650.02 million tonnes traders expected.





But its authoritative monthly report said the world stocks-to-use ratio, the amount of wheat available in proportion to consumption, was estimated at 26%, well above the 20.3% seen in 2007/08 when food shortages sent prices soaring and led to riots.

The lowered estimate prompted a surge in Chicago wheat futures prices, which had fallen 10% from two-year highs touched last week. At 9:33 a.m. CDT (1433 GMT), CBOT September wheat futures were up 19 cents at USD 7.13-3/4 a bushel.

In Russia President Dmitry Medvedev, visiting southern agricultural areas of what has been the world's third biggest wheat exporter, said many farmers were close to bankrupty.

"Grain has been lost on one quarter of the sown area," he said.

In response to its worst drought in a century, Russia has imposed a grain export ban which is due to come into force from August 15 to restrain domestic food prices.

Medvedev said the ban could be lifted before its planned December 31 expiry, depending on the harvest, although Prime Minister Vladimir Putin has said it could last into 2011.

Meanwhile, Russian Agriculture Ministry data showed the country may export no more than 4.5 million tonnes of grain in the 2010/11 crop marketing year and may have none to export after the ban expires on December 31.

"With a crop of 60-65 million tonnes exports may be 2.0-4.5 million tonnes," it said in a presentation.


Russia's farming anxieties were now focussed increasingly on possible problems in planting of winter wheat, due soon for harvest next year, and even for next spring's planting campaign. A government commission on the drought was due to discuss this on Friday.

"(Winter) sowing is unlikely at least until September," Roman Vilfand, director of the Hydrometcentre, the Russian government weather forecasting service, told a news briefing.

"The will not be sufficient rains for the sowing until the last 10 days of August. There will be rains in the last 10 days but not very intensive."

Winter grains, mainly wheat, account roughly for 40% of Russia's total grain output.

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