Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 8/6/10

Russia on Thursday banned exports of wheat, corn, barley, rye and flour from Aug. 15 through the end of the year, sending U.S. wheat futures prices up the daily limit and leading one analyst to predict higher feedgrain costs could curb U.S. chicken and pork expansion in the second half of 2010.

Drought in Russia is expected to cut its wheat crop by as much as 25 percent. Russia is the fourth-largest exporter of wheat globally.

Even before the ban announcement, poor weather in Eastern Europe and Canada coupled with increased speculative interest had contributed to a 68 percent rise in wheat futures prices, as well as a 29 percent increase in corn and a 13 percent increase in soybeans over the last five weeks, according to BMO Capital Markets analyst Kenneth Zaslow.

“Undoubtedly, Russia's ban on wheat exports has implications across the (agriculture) and protein industries,” he said in a note to investors.

Zaslow predicted elevated feed costs could cause chicken and hog producers to limit the expected production increases in the back half of 2010. He added that higher wheat prices in Eastern Europe may limit livestock production in that region, which could lead to higher protein export demand from the United States.

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