Wheat prices could drop as Russia lifts export ban

Muscat - 

The decision by the Russian government to lift its export ban on grains from July 1 could lower global wheat prices. Prices soared 50 per cent after Russia imposed the ban in August 2010, and the Omani government had to step in and re-introduce a subsidy it had discontinued in September 2009 to fight inflation.

Kanaga Sundar, analyst with Gulf Baader Capital Markets, said that the lifting of Russia's export ban could see global wheat prices drop. “If Russia opens up its exports once again, that could see supply come up and maybe we will see prices fall in the short term.”

Ahmed al Dhahab, general manager of Salalah Mills, said prices in Oman will not immediately be affected by the lifting of the ban, but global prices could eventually drop if the drought conditions currently affecting parts of Europe begin to improve.

He said, “The government is subsidising the wheat price in the local market; therefore, the Russian decision to end the ban on the export of wheat will not affect flour prices in Oman. On the world level, the wheat prices could ease a little, but it depends on the weather in the coming weeks.”

Oman Flour Mills could not be reached for comment, but the introduction of the ban was keenly felt in the sultanate, with company chairperson Manal al Abdwani saying in a September 2010 report to shareholders that prices rose as a result.

She had said, “In the last three months wheat prices have increased sharply by over 50 per cent due to the drought conditions in some part of Europe resulting in the ban of export from Russia. With commodity prices continuing to remain at these high levels, the government has approved the re-introduction of the subsidy and a marginal price increase.”

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