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High temperatures, which rose to a record 37.4 Celsius (99 Fahrenheit) yesterday in Moscow, have damaged 32 percent of land under cultivation and forced Russia to declare states of emergency in 23 regions. Grain prices may double this year because of the drought, according to the Grain Producers’ Union.

Inflation may quicken to 8.1 percent by December, compared with the government’s annual forecast of less than 6.5 percent, according to Yaroslav Lissovolik, Deutsche Bank AG’s head of research in Moscow. That will put pressure on the central bank to raise its benchmark rate by year-end for the first time since December 2008, said Natalia Orlova, Moscow-based chief economist at Alfa Bank, Russia’s biggest private lender.

Higher rates “may cause a correction in short-term sovereign bonds and, later, in long-term sovereign bonds,” said Evgeniy Nadorshin, senior economist at Trust Investment Bank in Moscow and an adviser to Economy Minister Elvira Nabiullina. The government, which plans to sell 1.2 trillion rubles ($39.3 billion) of bonds on the domestic market this year to finance its budget deficit, may increase that figure to pay for subsidies and contain the drought’s fallout, Nadorshin said.

July 26 (Bloomberg) -- Muscovites sweltered as the temperature soared to a record 37.4 degrees Celsius (99.3 Fahrenheit), and the number of Russians who drowned trying to beat the heat reached about 2,000.

Today’s temperature in the capital was the hottest since records began 130 years ago, the Hydrometeorological Monitoring Service said on its website. It surpassed the previous high of 36.8 degrees set in July 1920 during the Civil War. The mercury may rise to 38 degrees on July 29, according to Gidromettsentr, the state weather service. Unusually high temperatures have contributed to record deaths by drowning across Russia, which increased by 688 in the past three weeks, Rossiiskaya Gazeta reported on July 23, citing Emergency Situations Ministry data. Most of those who drowned were intoxicated, the government’s newspaper of record said. Another 39 people died yesterday, the ministry said on its website.

The heat wave has also hit Russia’s economy, with drought damage to 10.1 million hectares, or 32 percent of all land under cultivation, Agriculture Minister Yelena Skrynnik said on July 23. The ministry has declared weather-related emergencies in 23 crop-producing regions. Russian food grain prices may double in 2010 from last year because of the drought, the Grain Producers’ Union said in an e- mailed statement today. OAO GAZ, the van and truck maker controlled by billionaire Oleg Deripaska, halted production for two weeks because of the heat. Workers were sent home today on a “corporate vacation” through Aug. 8, spokeswoman Natalya Anisimova said by telephone.

Wheat prices have staged the most drastic rise in more than 50 years, as a drought in Russia fuels growing worries that it could lead to a global shortage of the grain. Harsh heat and a lack of rain in Russia have killed half of the crop in some hard-hit areas. The slump in production in one of the world's most fertile breadbaskets has pushed prices up 62% since early June, and last month saw the biggest and fastest increase since 1959.

Severe and persistent drought held southern Russia in its grip in June and July 2010. Low rainfall and hot temperatures damaged 32 percent of the country’s grain crops, said Russian Agriculture Minister, Yelena Skrynnik on July 23. This satellite vegetation index image, made from data collected by the Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA’s Terra satellite, shows the damage done to plants throughout southern Russia. A previously published image of land surface temperatures shows extreme heat in the drought region at the same time. The vegetation index is a reflection of photosynthesis. The index is high in areas where plants are dense, with plenty of photosynthesizing leaves. The index is low when plants are thin or not present. This image is a vegetation index anomaly image that compares photosynthesis between June 26 and July 11, 2010, to average conditions observed in late June and early July between 2000 and 2009. Below-average plant growth is shown in brown, while average growth is cream-colored. If there had been above-average growth in the region, it would have been represented in green. The land around the Volga River is brown in this image. Plants throughout the region were stressed, producing fewer leaves and photosynthesizing less between June 26 and July 11, 2010. The image is speckled brown. In the large image, which covers a broader region in more detail than the web image, the dots are clearly fields of crops. Here, the dots blend together to reveal a broad region of drought-affected crops. The Volga region is one of Russia’s primary spring wheat-growing areas. The vegetation index values shown here were the lowest late-June values seen in Russia’s spring wheat zone since the MODIS sensor began taking measurements in 2000, said an analyst from the United States Department of Agriculture (USDA) Foreign Agricultural Service. Largely as a result of the drought, the USDA expected Russia’s overall wheat crop to be 14 percent smaller than in 2009. The drought affects more than Russian farmers. Russia is the world’s fourth largest wheat exporter. If Russia isn’t able to supply as much wheat, the world’s overall wheat supply will drop. With less wheat on the market, wheat prices will go up. As of July 23, wheat futures (the current price for wheat that will be harvested and delivered in September) had risen for four consecutive weeks because of the expected drop in supply of Russian wheat, reported Bloomberg.

For the past four weeks temperatures across western Russia have topped 35 degrees Celsius (95 degrees Fahrenheit), killing scores of people and creating what is thought to be the worst drought since 1972.

Many farmers are on the brink of bankruptcy, while a state of emergency has been declared in 17 Russian regions. Nearly 10 million hectares of crops have been destroyed by drought.

"Such long periods of summer drought have been registered before, for instance, in 1936, but over the past few years they have become more frequent," Alexei Kokorin, the head of WWF Russia's climate program, told RIA Novosti. "This is a reaction of the climate system to man-made changes in atmospheric chemistry," he said.