A day after Russia banned wheat exports because of a drought-ravaged crop, neighbouring Ukraine considered a similar move Wednesday.
Ukraine, the sixth-largest wheat producer in the world, will make a final decision on its wheat crops next week. A frosty winter followed by a scorching summer heat have devastated agricultural yields.
The country's agricultural minister said at a news conference on Wednesday it is considering quotas on wheat and other export crops.
"They will be soft, targeted and agreed upon with grain traders," Mykola Prysyazhnyuk told the Financial Times
Weather forecasts are calling for the crushing heat wave that has paralyzed most of Eastern Europe for weeks to continue for the next 10 days. The situation in Russia has been called the worst drought in 130 years.
Other major wheat-producing nations such as Australia and Argentina have also reported supply setbacks. The U.S. Department of Agriculture is forecasting global wheat exports to decline by 16 per cent this year.
Grain traders are anxiously awaiting a report to be released Thursday in which the USDA will update its grain projections for the year.
The Canadian Wheat Board advised farmers last week that supply shortfalls were causing "potential pricing opportunities" as European crops come under pressure.
Demand is pushing prices higher, but production can't keep pace. The agency's production outlook for the coming crop year is projected at 18.45 million tonnes — the lowest since 2002. The agency exported 18.8 million tonnes during the last crop year.
Wheat prices have pulled back from the two-year highs they hit last week. Wheat for December delivery tumbled 12.75 cents to $7.14 US a bushel on Wednesday. Futures prices have gained more than 50 per cent since the start of July.
Kazakhstan, along with Belarus, is in a customs union with Russia, something that could lead those two countries to stop exports at their next policy meeting on Aug. 17.
The World Bank has warned all countries against export bans, calling them "counterproductive" and leading to further price woes.