Vladimir Putin, the Prime Minister of Russia, said that the Russian government will ban grain exports for until around December 31, 2010. This is a move which was decided with his cabinet at a recent government meeting, and this was spearheaded because of a drought that was one of the worse to hit Russia in a matter of decades.
Because of this announcement by Putin, extreme changes in wheat futures were recorded in Europe and Chicago, increasing wheat future values up 10 percent and setting records in a 2 year period. This situation was also seen by the United Nations food agency as catapulting a very serious situation in the overall food market all over the world.
The drought has so severely affected Russia in fact, that around 10 million hectares of land have dried up to the point that it can no longer be used for a significant amount of time. A lot of economists new about this situation even before the announcement by Putin, and they were in fact reassured by the Russian government that exports will remain the same compared to last year.
However, that will not be the case, and in fact, Kazakhstan might follow suit because of an agreement between the two countries, severely affecting the wheat market even further because Kazakhstan is also a major wheat exporter.