(Bloomberg) -- Russia’s wheat production may plunge by 33 percent this year after the most-severe drought in 50 years harmed crops, a U.S. Department of Agriculture unit said.
Output will fall to 41.5 million metric tons in the year that began July 1 from 61.7 million tons last year, the USDA’s Foreign Agricultural Service said in a report posted today on its website. The attache’s estimate was below the official U.S. projection announced last month. Russian exports will plunge 78 percent to 4.1 million tons, the service said.
“Significant grain area was destroyed by drought, and harvested area might be one of the lowest in the last 10 years,” the U.S. service said. Russia, once the world’s third- largest grower, barred exports of grains in August.
On Sept. 10, the USDA projected that Russia would produce 42.5 million tons of wheat and export 3.5 million tons.
Russian barley output may drop 54 percent to 8.2 million tons from a year earlier, and exports may plummet 91 percent to 250,000 tons, the U.S. attache said. Corn production may drop 11 percent to 3.5 million tons.
Today, wheat prices fell in Chicago, capping the longest slump in four months, as rains in Russia and Eastern Europe improved the prospects for winter crops.
Wheat futures for December delivery fell 7.75 cents, or 1.2 percent, to settle at $6.4725 a bushel on the Chicago Board of Trade. The grain dropped for the sixth straight session, the longest slide since early June. The price has climbed 20 percent this year.
--Editors: Patrick McKiernan, Daniel Enoch
To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
This sounds problematic with the international market. Since it's a major commodity, and with these demands, high prices might go up further. Hopefully, financing companies could help in this situation.
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