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News roundup: Wheat prices reach two year highs on Russian export ban, BP to seal Macondo well

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Wheat markets have been in havoc after Russia banned grain exports to pervert shortages in the domestic market in the wake of the worst drought in decades drought caused by devastating heat and fires that have been ravaging the country all summer.

Russia’s Prime Minister Vladimir Putin announced the ban, which will last until at least 31 December this year, on Wednesday, propelling wheat prices to two year highs at nearly US$8 per bushel.

The Food and Agriculture Organization (FAO) revised its supply forecasts to reflect the impacts of the droughts on crops. FAO slashed its forecast by 3.7% to 651 million metric tons for 2010 from a previous estimate of 676 million tons. At the same time, FAO said it did not expect the situation to lead to a food crisis as the inventories amassed during the previous two years of records harvests were sufficient to cover any shortfalls in production.

At the same time, FAO noted that should the Russian drought continue, the markets could deal with serious supply shortages in 2011-12.

It was reported this week that the Trade Unions Congress (TUC) is urging unions to participate in nationwide protests and strikes against spending and job cuts. The action is intended to coincide with the government’s spending review.

“Our defence must be built on generalised strike action and community resistance in the biggest public mobilisation since the anti-poll tax movement,” said General Secretary of the RMT (Rail, Maritime & Transport) union Bob Crow.

In other news, Business Secretary Vince Cable announced new rules aimed at cutting red tape and government interference for businesses. Now, before introducing any new regulations imposing costs on businesses and charities, the government will have to identify and eliminate regulations that entail equivalent costs. The costs associated with regulations amounted to more than £88 billion last year.

The new one-in, one-out rule will not apply to regulations imposed by the European Union.

Oil and gas supermajor BP (LON:BP) is now gearing up to conclude its relief operations in the Gulf of Mexico with the completion of a relief well to permanently seal the leaking Macondo well, which was plugged this week. The catastrophic spill, which has been labeled as the greatest environmental disaster in US history, has wiped out more than a third of BP’s market value. Last month the company announced that current Chief Executive tony Hayward would step down to be replaced by current Managing Director and former CEO of BP’s Russian JV (joint venture) TNK-BP Robert Dudley.

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