Wheat prices surged to a two-year high while shares in European brewers and food producers fell today as markets reacted to the sudden imposition of a ban on grain exports from drought-hit Russia.
Russian prime minister Vladimir Putin moved decisively yesterday to halt exports of grain and flour from August 15 to the end of the year and the country's railroad monopoly said today it will stop loading grain for export from tomorow.
The speed of the move shocked Russia's Grain Union, the country's main industry lobby, which pleaded with the government today to delay the ban until September 1st.
Russia had been the world's third largest wheat exporter last year but is set to slide down the table this season with the worst drought in more than 100 years devastating crops.
"Effectively, a big chunk of the global market is off-line - there's going to be something like 5 million tonnes that aren't going to be available for export," said Matthew Kaleel, a commodities specialist at fund manager H3 Global in Sydney.
Shares in Danish brewer Carlsberg, which faces a sharp rise in input costs, lost 4.5 per cent, while food companies such as Nestle and Danone also saw their shares decline in value.
Wheat futures on the Chicago Board of Trade rose to a peak of $8.41 a bushel, the highest level in about two years with prices nearly doubling since early June.
Reuters