The world's second largest export in the wheat market - Russia - has been sitting out since the country had a major crop failure and embargoed exports as a way to bolster supplies. According to a Bloomberg report, Russia won't extend the ban and before the announcement wheat futures were up nearly 80% in the past year. However, news of Russia's return sent chills into the overnight wheat trade.
Russian grain plantings have risen more than 10% to top 24 million hectares - or nearly 60 million acres and apparently the country has more than 6 million tons of grain in reserve. Russia could export 2.5 million tons a month.
Analysts are watching the market swings with the Russian news, some say the event will get a little attention from market watchers which could cause a short-term slump. The U.S. wheat operation is the world's largest shipper, but crop conditions are not good.
The latest report shows that 45% of the winter wheat crop is in very poor to poor condition based on the latest USDA crop quality report. And about 54% of the country's spring wheat has been planted, which is behind last year's 89%.
It is being reported that Russia's agriculture ministry estimates total grain harvest may be 85 to 90 million tons, up from 60.9 the last year.
Grain buyers will be watching this development unfold and take particular interest in the quality of this feed. The one impact of a feed-wheat market is to soften demand for corn sales too, but that particular outcome remains to be seen.
Russia's drought is the worst in the last half-century, and has led to a run up in wheat prices with the highest numbers since 2008.
USDA reports that Russia will export 10 million tons of wheat in the 12 months ending June 2012, which is up from 4 million tons in the current year.