Despite Russia’s decision last weekto halt wheat exports, Canada probablywon’t be able to capitalize withadditional sales, said a senior officialwith the Canadian Wheat Board.David Boyes, CWB commodity riskmanager, said it’s a matter of supply.“The U.S. has a big crop and so willlikely make up the bulk of the shortfall,”he said. “We have a smallercrop.”The CWB’s strategy will be to focuson quality rather than volume, movingquality wheat into the markets thatwill provide the best return, he said.Russia announced Aug. 5 thatbeginning Aug. 15, it will temporarilyban grain exports in the wake of arecord heat wave and accompanyingdrought that have destroyed millionsof acres of wheat and other crops.“As of today, Russia has no grainmarket,” Russian trader Kirill Podolskytold Bloomberg News. “This willbe a catastrophe for farmers andexporters alike.”How long the ban will last remainsunclear.It initially was expected to end Dec.31, but prime minister VladimirPutin weighed in on Aug. 9, sayingthe ban could last into the new year.A senior government official saidRussia remains committed to itslong-term obligations but many buyersof Russian wheat will be scramblingto find new suppliers, mostlikely the United States, Europe orAustralia.Wheat prices responded to the banby rising to two-year highs on the dayof the announcement.Soft red wheat trading on the ChicagoBoard of Trade had increasedthe week before the announcement,as rumours of a grain embargocirculated throughout the industry.December futures on the MinneapolisGrain Exchange opened at$8.05 US per bushel Aug. 5, up from$5.29 at the end of June.The market showed its volatility bydropping the limit across all wheatmarkets the next day, then reboundedin response to Putin’s comments,exceeding $7.10 at Chicago Aug. 9.Russia has become one of theworld’s biggest producers of wheat,barley and rye, ranking number fourin wheat in 2009-10 with a crop of61.7 million tonnes.A poll of market analysts by Reutersnews agency suggested the 2010-11Russian crop will shrink to 46 milliontonnes this year.Russia has also asked neighbouringKazakhstan and Belarus, both facingdrought and reduced production, toimpose similar export bans.Russia has become a major exporterof wheat, mainly lower quality andlower priced, buoyed by bumperharvests in 2008 and 2009, and madeinroads into markets previously heldby the United States, Europe andAustralia.Exports totalled 18.4 million tonnesin 2008-09 and 17.5 million the followingyear, accounting for aboutnine percent of global wheat trade.Before the ban, exports had beenforecast to be 14 million tonnes in2010-11.One Russian agricultural forecasterprojected exports could dip as low asthree million tonnes in 2010-11.Boyes said the Russian export banwasn’t completely unexpected.He said Russia has a history ofexporting itself into a grain deficit,and being forced to import to meetdomestic demand.“I suspect this time they’re worriednot about running out of wheat,they’re worried about domestic foodprice inflation,” he said. “They wantto keep domestic supplies high inorder to keep domestic prices low.”Boyes said the ban will support thenearby price for the next few monthsbut it’s hard to predict what will happenafter the ban is lifted.Another issue is whether buyersburned by the Russian ban willreturn to buying Russian wheat.
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