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. Last Updated: 07/27/2016

Wheat Hits Record on Talk of Curbs

bloombergA grain harvester gathering wheat near Rostov. A government working group is reviewing measures to curb prices.
Wheat rose to a record in Paris on Monday as traders speculated that Russia could curb shipments to restrain domestic food prices.

The government has formed a working group that will consider measures to curb grain prices, which may include sales from state inventories as well as export duties and quotas.

The group is made up of officials from the Agriculture Ministry, the Grain Union and the Flour and Cereal Producers' Union, a ministry spokeswoman said Monday, declining to be identified by name because of ministerial rules.

The group will propose measures by the middle of the month, including possible export restrictions, she said.

The group may also suggest export duties and quotas, Sergei Shakhovets, head of the information and analytics department at the Grain Union, said. The union consists of the nation's biggest grain producers and traders.

Agriculture Minister Alexei Gordeyev two weeks ago said the government may sell some of its 1.5 million tons of wheat reserves. Prices have risen 70 percent this year.

Drought in the country's main wheat-producing regions of Rostov, Volgograd and Orenburg may cut production by 3.2 percent to 44.3 million metric tons this year, according to the U.S. Department of Agriculture. Year-end inventories may drop to a five-year low of 2 million tons, the department said in an Aug. 21 report. The USDA forecast a 3.8 percent decline in Russian wheat exports, to 10.1 million tons.

"The election year in Russia makes government policy, including possible tariff or quota regulation of grain exports, less predictable than ever," the USDA said in its report.

n A spokesman for the Kazakh Agriculture Ministry said the Central Asian country planned to introduce licenses "soon" for grain exports to reduce speculative trading.