October 5, 2010

Russian wheat output may drop 33%

Russia's wheat production may plunge by 33% this year after the most-severe drought in 50 years harmed crops, a USDA unit said.

Output will fall to 41.5 million tonnes in the year that began July 1 from 61.7 million tonnes 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 US projection announced last month. Russian exports will plunge 78% to 4.1 million tonnes, 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 US service said. Russia, once the world's third- largest grower, barred exports of grains in August.

On September 10, the USDA projected that Russia would produce 42.5 million tonnes of wheat and export 3.5 million tonnes.

Meanwhile, corn production may also drop 11% to 3.5 million tonnes. Earlier, 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%, to settle at US$6.4725 a bushel on the CBOT. The grain dropped for the sixth straight session, the longest slide since early June. The price has climbed 20% this year.