Russian authorities ban export of grain
The Russian authorities have been forced into introducing a ban on the export of grain after severe droughts in the region effectively wiped out much of the supply available in Russia. There are now concerns that the ban from the Russian government will impact on the world wide grain market as immediately after the announcement there was a 7% increase in the price of the commodity.
The Russian ban, which affects wheat, corn, barley, rye and flour will be introduced to the market on the 15 August and run until the end of 2010. When you consider that the price of grain has increased by 85% from the June low, further problems with the supplies of this particular commodity could cause problems around the world.
If the price of various grains was to increase on the commodity markets this would have an almost immediate impact upon the cost of associated foods around the world. The problem is that this would then feed into inflation and potentially put a tighter squeeze on consumer and business budgets. At a time when governments around the world are looking for inflationary pressures to fall back this is the last thing they would have expected and would have wanted.
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