Argentine farmers plan to dramatically boost this year's wheat harvest, in a bid to cash in a Russian ban on cereal exports imposed in response to a record drought and devastating fires, officials said Friday. Eyeing wheat prices at two-year highs, Argentina's cereals exchange said “the high price of wheat bolsters our intention of making good on coverage.” “In some cases (farmers) are abandoning barley fields” to plant new wheat crops, the exchange said. Earlier this week, leading wheat exporter Russia cut its grain harvest forecast by millions of tons because of the worst drought for decades. Russia, a top global wheat exporter, has seen 20 percent of its arable land (10 million hectares, 24.7 million acres) scorched by a heatwave which has also hit its ambitions to raise its share of global markets. Argentine officials said they hoped to increase wheat fields to 4.2 million hectares (10.4 million acres), an increase of over 20 percent. The Argentine government expects production to top 13 million metric tons this year. In New York, grains gave back some of their big advance on Friday, a day after Russia's decision to ban wheat exports sent prices to their highest level in two years. Energy futures also tanked after a disappointing report on July jobs underscored how weak of the US labor market is. Gold, which traders use as a safe haven asset, closed above $1,200 for the first time since mid-July. The rally in wheat Thursday also helped drive up prices for corn, oats and soybeans. Prices for all those contracts gained substantially this summer. Wheat for December delivery, now the most actively-traded contract for the grain, dropped 60 cents to $7.5525 a bushel after jumping 60 cents to $8.1525 on Thursday. September wheat fell 60 cents to $7.2575 a bushel. It also soared 60 cents Thursday, the maximum allowed by the Chicago Board of Trade. December corn slid 2 cents to $4.20 a bushel, November soybeans dropped 4.5 cents to $10.335 a bushel and December oats fell 2 cents to $2.92 a bushel. Russia, one of the world's biggest grain exporters, said Thursday that it was cutting off wheat exports from Aug. 15 to Dec. 31 because a severe drought this summer has already destroyed one-fifth of the country's crop. Russia will also ban exports of wheat flour, barley, rye and corn. Commodities traders have stressed that world wheat stocks are still abundant, despite the loss of Russian wheat exports. The United Nations' Food and Agriculture Agency cut its forecast for 2010 production early this week by nearly 4 percent, to 651 million metric tons, but does not expect a food crisis akin to the shortages in 2007-08. It said supplies are “adequate” after two years of bumper crops.
