Russia’s worst drought and heat waves (exceeding 40C) since 1975 have forced grain prices to soar on the international commodity exchanges worldwide. Wheat prices have reportedly reached a two-year high following the dramatic developments in Russia, which is responsible for about 25% of exports to the world.
Grain prices in August have allegedly soared 50% compared to what they were in June this year. The baking industry is gearing up to warn customers that they can expect to be hit by a 15% knock-on price hike effect that would only be announced after the fall harvests in the Northern hemisphere.
The same goes for the meat industry, which will have to settle for less livestock if farmers are not willing to pay more for grain animal feed. The situation is dire because Russia currently happens to be the world’s fourth largest grain exporting nation behind The United States, Europe and Canada.
Russia initially announced that it would produce some 85 million tonnes of grain this year, but experts reportedly said that it would be lucky to harvest maximum 70 million tonnes (13 million tonnes less than anticipated) as compared to the alleged 97 million tonnes last year. Russia is experiencing its worst wild fires in modern history as the heat wave relentlessly continues there.
Despite the expected shortfall Russian Deputy Agriculture Minister Alexander Belyayev reportedly claims that the decision makers in Moscow would not restrict grain exports, instead it would resort to reserves or allocate less to the domestic market and help maintain stability on the international commodity markets.