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Russian grain ban sees prices surge a further 6%

There are fears regarding inflationary pressure in the UK, and around the world, after the Russian government announced a forthcoming ban on the export of grain from the country. Due to abnormal weather conditions in Russia the authorities have decided to retain as much grain as possible within the country to feed domestic demand, something which has had a major impact upon grain prices on the commodity markets.

Today's gain brings the increase over the week to around 25% and there are serious concerns of contract defaults in the grain market. Any increase in the price of grain will impact the cost of everyday goods such as bread and flour and ultimately with likely supply issues in the future, food companies are desperate to preserve their own supply chains as soon as possible. Traders are reporting something of a "scramble" to find alternative supplies which is almost certain to put further pressure on the price of grain.

There is no doubt that the last two or three years have seen some of the most alarming and concerning economic situations arise. First we saw the credit crunch, then the worldwide economic downturn, then the collapse of Eastern European economies, then the sovereign debt crisis to name but a few. Now there is the real fear that an increase in grain prices will put pressure on inflation around the world which will create very difficult situations and decisions for the likes of the Bank of England.

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