Russia's worst drought in half a century is expanding the downside pressures across the boarders. Russia announced that they are imposing an export ban on grain and grain products from August 15 to December 31 as the drought cut the yields.
The spokesman for Prime Minister Vladimir Putin, Dimitry Peskov, gave the dates of the ban by a telephone interview in Moscow today. The wheat rallied on the news to strike the highest in 23 months.
Putin has already said that the ban would be appropriate especially after the drought and the record heat in central Russia and along the Volga River forced them to declare a state of emergency in 28 crop producing regions.
Putin did assure that Russia has sufficient reserves of grain according to what he told a government meeting, but we must prevent domestic prices from rising, preserve cattle herds and build up reserves from next year.
According to Moscow-based VTB Capital , the Agriculture Ministry cut its grain crop projections to as low as 70 million metric tons compared with 97.1 million tons last year. This will be a downside pressure on the economy amid the already ongoing uncertainties and high government liabilities as agriculture accounts for about 4 percent of gross domestic product.