Tough economic sanctions imposed on Russia by the West, the continuing fall of oil prices, and the weakening value of the ruble has Moscow scrambling for ways to bolster its troubled economy while driving December wheat futures higher.

In an effort to protect domestic wheat prices, last week Russia moved to restrict grain exports in hopes of encouraging farmers to funnel wheat sales to meet domestic demand. While analysts say Moscow is being careful to avoid formal export curbs that could damage relations with its regular grain customers, the government is attempting to slow exports by increasing quality controls, a play critics say is designed to slow the movement of grain out of the country.

In mid-December, wheat futures demonstrated solid gains in anticipation of Russia's falling wheat exports, but prices lost ground over the last week of the year. Chicago's soft red winter (SRW) wheat, however, was still on track for a higher December late last week.

Russia is facing a growing disparity between export and domestic wheat prices as the ruble continues to weaken as a result of economic woes. As the new year begins, the ruble had slumped 40 percent against the dollar over the second half 2014. Russian farmers were getting about $275 per ton for exported wheat and $195 a ton if they sold their crop on the domestic market.

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Deputy Prime Minister Arkady Dvorkovich said last week the government was using all informal instruments possible to restrict grain exports. Beginning in February, however, Russia will impose tariffs on wheat exports amounting to about $43 a ton in an effort to close the gap between export and domestic wheat prices.

Russia reported a record wheat harvest this year, but analysts say growers were opting to export their crop where prices, linked to foreign currencies, are now considerably higher than before the ruble lost ground as result of Western sanctions.

Imposing tariffs on wheat exports is only the latest effort to discourage Russian farmers from selling on the international market. Trade officials say quality inspections increased as early as the first week in December and reports from Russia indicate that not only have inspections intensified but so have strict inspection standards.

Rail transport issues

In addition, rumors have surfaced that Russian grain producers have experienced unexpected problems securing rail transport for wheat designated for export and, in addition to transportation setbacks, government officials have made it more difficult to obtain food safety export certificates.

According to Reuters, Vladimir Putin's administration is scrambling as the value of the ruble continues to decline and falling oil prices further complicate the country's economic problems with little relief in sight.

As a result of Russia's troubled economy, wheat prices rose in international markets the last week of December, partly as a result of growing concerns that Russia may impose a total ban on wheat exports if the ruble continues to lose ground. It wouldn't be the first time for such a ban. Russian trade officials imposed an export ban four years ago after drought conditions resulted in an extremely poor harvest.

If such a ban were to be implemented, analysts say the price of wheat could jump significantly as Turkey and Egypt, large buyers of Russian wheat, may be forced to seek new international suppliers.

Since the export season began in July, Russia has exported an estimated 21 million tons of grain, but could export up to 30 million tons without jeopardizing local demands, according to European sources.