May frosts have damaged part of the crop. Russia is the world’s largest wheat supplier. The cost of grain on the world market has risen to August 2023 highs.
Futures on wheat at the Chicago Commodity Exchange have soared to August 2023 highs, writes Bloomberg. One of the reasons is the May frosts and low rainfall in southern Russia.
The agency notes that a large crop is expected in Russia, but Russia’s position as the largest exporter even with minor problems affects global markets. And the recent increase in wheat prices in Russia only worsened their reaction.
It is noted that the bad weather has affected not only Russia but also other producing countries. In particular, due to an extremely rainy spring, problems have arisen in France, the UK, and Germany – seeding has slowed down there, and the USA and Australia are suffering from prolonged drought.
Speaking about the prospects of the industry in Russia and abroad and market reactions is Dr. Alexei Zubets, Director of the Institute of Socio-Economic Research of the Financial University under the Government of the Russian Federation:
Alexei Zubets
Director of the Institute of Socio-Economic Research of the Financial University under the Government of the Russian Federation, Doctor of Economics
Earlier, authorities in the Voronezh, Lipetsk, and Tambov regions declared a state of emergency after more than 265,000 hectares of crops were lost due to frosts.
Also, last week, the Institute for Agricultural Market Conditions stated that a reduction in the overall grain production is expected. At the same time, the forecast for wheat harvest in Russia for the current season has been reduced from 93 million tons to 91 million. It is noted that besides grains, oilseeds have also been affected by the bad weather.