Grain markets opened well down this morning (Tuesday 31 May) following Russia’s announcement at the weekend that it will lift its grain export ban from 1 July.

The London November 2011 feed wheat futures contract opened down by almost £8/t at £189.05/t but had recovered £3/t of this by late morning.

The fall followed similar movements on Monday in the French market which was unaffected by the bank holiday. With weather worries in most of Europe, traders say volatility will remain high at least until more is known about the Russian harvest.

Although Russia has potential to export up to £20m tonnes of grain, this can only be achieved if the crop reaches 85 to 90m tonnes.

“Worries are also surfacing over climatic conditions in Russia. Lack of moisture has already been observed in some regions and temperatures exceeding 30C are expected

this week,” said French analyst Agritel in its weekly report.

There are also concerns within Russia that higher grain prices offered by exports will contribute further to inflation, so some are expecting exports may be limited in a bid to control this.