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. Last Updated: 07/27/2016

Grain Prices Jump on Talk About Russian Aid

Global food futures prices surged on speculation that Washington and Moscow are nearing a deal to donate humanitarian aid to crisis-hit Russia.

U.S. and Russian officials said Thursday that a formal agreement has yet to be reached, but news that the governments were considering aid sharply pushed up world grain, soybean, pork and beef futures prices.

Industry experts slammed the idea of food aid, saying Russia has enough grain to last the winter and free handouts could hurt local producers.

December wheat futures went up 11-3/4 cents to $2.95-1/2 a bushel and corn futures 7 cents to 2.17-1/4 a bushel at the Chicago Board of Trade on Wednesday over rumors that the United States was considering giving Russia 3 million tons of wheat and 500,000 tons of soybeans. Pork and corn futures also rallied on expectations that Russia will receive 1.5 million tons of corn and 100,000 tons of pork.

Russia, which is suffering from a wheat harvest shortfall and a ruble devaluation that slashed imports, reaped about 30 million tons of wheat this year compared to 44.2 million tons in 1997.

Russian officials declined to give details Thursday about U.S. aid talks. Moscow is considering proposals from Washington and "many other countries," said Vasily Fomin, head of the Russian Agriculture Ministry's foreign relations department.

Another ministry official said any initiative belongs to the United States.

A Moscow-based U.S. diplomat said Washington has made "no specific offer of any specific commodity," but that there was "willingness to consider offering assistance."

He added that Russia has not officially requested aid.

Meanwhile, a former agriculture minister lashed out Thursday at countries for offering aid, saying such relief keeps the nation dependent on the West.

Russia probably has enough grain to last the year and aid would only deter domestic farmers from producing more, said former deputy agriculture minister Leonid Kholod.

The nation's underfinanced farms "have a unique chance to rise from the ashes" and humanitarian aid "is like a narcotic," he said.

An executive with a large Russian grain trading company agreed that no additional grain was needed at the moment, but said 3 million more tons of wheat would hardly make any difference on the Russian market.

"The grain will be coming in over a year, it will be held up in ports, and the whole amount will probably not be delivered anyway," he said. Agriculture Minister Viktor Semyonov said in July that the government was not going to import any grain this year despite the drop in the amount of grain harvested.

But Stoyan Alexandrov, head of the Central Cooperative Bank of Bulgaria, said Wednesday that the Eastern European nation would export 500,000 tons of wheat to Russia under a deal to be finalized later this week, The Associated Press reported.