KANSAS CITY — Wheat futures prices surged Aug. 5 on the three exchanges of Chicago, Kansas City and Minneapolis in response to Russian Prime Minister Vladimir Putin’s announcement Russia would halt grain exports from Aug. 15 through the end of the year because drought-reduced crops raised fears of domestic food price inflation. Prices of several wheat futures contracts opened up the 60c daily limit before pulling back, which allowed trading to resume. The Chicago September future was locked limit up throughout the session.

The Russian announcement was not unexpected. For several days there were rumors the country would embargo grain sales as it became clearer the most severe drought in decades was exacting a heavy toll on the nation’s grain production.

The International Grains Council on July 29 forecast Russian wheat production this year at 50 million tonnes, down 7 million tonnes from its June projection and compared with the U.S. Department of Agriculture’s July projection at 53 million tonnes and the 2009 outturn of 61.7 million tonnes. The private U.S. and world crop analyst Informa Economics on Aug. 5 estimated the 2010 Russian crop at 49 million tonnes. The U.S.D.A. will issue revised world wheat supply-and-demand estimates on Aug. 12, which will include adjusted numbers for Russia and other drought-stressed nations including Kazakhstan and Ukraine.

Egypt, the world’s largest wheat buyer, this week purchased 360,000 tonnes of wheat from Russian exporters, and the country’s buying agency said it hoped the transactions would be honored.

Shorter crops in the former Soviet Union and certainly the Russian export ban were expected to shift more world wheat demand to the United States, which made for potent fuel for the futures rally. At the same time, the current rally in wheat futures predated confirmation the Russian wheat crop might be in trouble. Prices began to rally in mid-June. By today’s market close, the September wheat futures contracts at $7.85¾ in Chicago, $7.80 in Kansas City and $7.83 in Minneapolis were up 77%, 66% and 57%, respectively, from their June 9 values.