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Huge Russian Burn-off And Worries Over Food Stocks …

  • August 7th, 2010
  • Posted by EUEditor

europe-farms.jpgThe thick pall of smoke settling over Moscow this week, from the fires still burning through much of Central Russia, is a reminder the prolonged bad conditions hitting farm production …though international food stocks are said to be holding up for now.


Muscovites have been warned by authorities to stay indoors this weekend, to avoid the choking air — charged with carbon monoxide up to six times normal limits for healthy breathing.

Russia has also stopped wheat exports, as stocks dwindle, the price of bread keeps rising, and the drought-afflicted landscape threatens a new bad growing season.

With  the third largest exporter (after the United States and Canada) out of the market, world prices for the grain have moved up sharply – US wheat futures rising by one-third since the start of July.


The Food and Agriculture Organisation has cautioned against a panic, though it has had to cut its production estimates.

Statement from the FAO:

fao-emblem_en.gif“The impact of unfavourable weather events on crops in recent weeks has led FAO to cut its global wheat production forecast for 2010 to 651 million tonnes, from 676 million tonnes reported in June.

“But despite production problems in some leading exporting countries, the world wheat market remains far more balanced than at the time of the world food crisis in 2007/08 and fears of a new global food crisis are not justified at this point, FAO said.

“A continuing, devastating drought afflicting crops in the Russian Federation, coupled with anticipated lower outputs in Kazakhstan and Ukraine have raised strong fears about the availability of world wheat supply in the 2010/11 marketing season.

“The turmoil in global wheat markets, which has intensified in recent weeks, is evidence of the growing dependence on the Black Sea region, an area renowned for erratic yields, as a major supplier of wheat to world markets. In addition, an expected production decline in Canada, another major producer and exporter of wheat, has reinforced market worries.


belgium-open-fields-reduced1.jpg“International wheat prices have jumped by over 50 percent since June. This rapid increase in prices is prompting concerns about a repeat of the crisis of 2007/08.

“But after two consecutive years of record crops, world inventories have been replenished sufficiently to cover the current anticipated production shortfall. Even more importantly, stocks held by the traditional wheat exporters, the main buffer against unexpected events, remain ample …”


The organisation’s World Wheat Balance calculations may yet stagger in the coming year.

Prospects for good harvests hav e been flagged in Ausralia ansd the United sattes, but there is concern that the serious situation in  Russia may contin ue, affecting the rest of the wolrld.

“Should the drought in the Russian Federation continue”, the FAO said, “it could pose problems for winter plantings in that country with potentially serious implications for world wheat supplies in 2011/12.”


Richard Galpin, Moscow, BBC News, Moscow drought, 6.8.10.

Food and Agriculture Organisation (FAO), Rome, “FAO cuts wheat production forecast, sees supplies as adequate”, 4.8.10.…, (7.8.10).