The ruble crisis is rippling through the global wheat market.
As Russia’s currency extended a plunge to a record low against the dollar last week, the nation slowed grain shipments to preserve stockpiles and keep domestic prices in check. Russia is the fourth largest exporter, and the measures spurred hedge funds to triple their bets on higher prices.
Futures jumped to the highest since May last week after an exporters association said Russia denied certificates that grain sellers and buyers need. President Vladimir Putin warned Dec. 18 that the economic crisis could drag on for two years at a time when cold is threatening winter crops in the U.S., the biggest grain shipper.
Russian bread prices jumped as much as 10 percent in the month through Dec. 11, according to retailers. The nation’s food inflation accelerated to 13 percent in November, led by a 54 percent gain for buckwheat and a 34 percent increase in tomatoes, government data show.
The country is denying certificates for grain destined for countries other than Egypt, Turkey, India and Armenia, according to a letter from the National Association of Exporters of Agriculture Products.
The association, whose members represent 50 to 70 percent of Russia’s grain exports, stopped purchases for shipments abroad and called for other suppliers to back its decision for a halt until the domestic market stabilizes.
The strengthening dollar is making American exports less attractive and could stem the rally for Chicago futures, said Shonda Warner, the managing partner of Chess Ag Full Harvest Partners in Clarksdale, Miss., which oversees about $150 million.
Rising production outside Russia could also curb the rally. The world crop is forecast at a record 722.18 million metric tons by the U.S. Department of Agriculture.
“There’s a lot of grain in storage and on farms, and everyone is using the rally to sell it,” Warner said. “The lid is going to stay on the entire complex for the next year or two unless we have some sort of huge weather event.”
A drought in 2010 slashed Russia’s harvest and spurred the nation to ban shipments. Prices surged 47 percent that year.