Some traders had feared that Russia, which is expecting a bumper crop this year of about 50 million tonnes, would flood the market ahead of any sanctions. This would put further pressure of wheat prices, which have plunged to four year lows.

But ANZ agriculture economist Paul Deane said markets have so far shrugged off the Ukrainian-Russian tensions. Instead, he said most of the concern was focused on next season’s crop, particularly after the European Union imposed sanctions aimed at stopping Russian banks raising capital on Western capital markets.

Mr Deane said this would most likely tighten access to credit for Russian farmers when they begin planting next season’s crop in October.

“The concern is the wheat planted in that region might be pulled back significantly because of the difficulty in farmers getting finance and higher input costs with their currency as well is an issue,” Mr Dean said.

“That’s going to be one of the factors that will potentially support the market next year. Once we get into the first half of 2015, we’d expect to see higher wheat prices.”

The European Union published a law last week that would curb arms sales to Russia and to cut off financing for five major Russian banks. EU officials say the sanctions aimed to inflict maximum pain on Russia and minimum pain on the EU.

Moscow denounced the measures, agreed by the 28 EU member states, as "destructive and short-sighted", while fighting has intensified in eastern Ukraine between Kiev forces and the pro-Russian separatists.

The EU sanctions will be subject to a three-month review to assess whether they are achieving their aim of forcing President Vladimir Putin to "de-escalate" the crisis.

About 20 million tonnes of Russia’s wheat crop is slated for export. Global wheat prices have skidded 27.6 per cent since May, after having rallied when Ukrainian-Russian tensions erupted in February and on the back of US crop concerns, which failed to eventuate.

“As these potential threats to supply diminished, leveraged money or speculators became aggressive sellers, moving quickly from an overbought position to a neutral position in just six weeks,” Mr Deane said.

It was initially feared that wet and cold and cold weather would delay the planting of the US crop.

“As it turned out that was a bit of an overreaction,” Mr Deane said. “Since then we have had pretty ideal growing conditions and now the market is working on a pretty big US corn crop.

“That’s really been the key reason for grain prices coming off.”

Farm commodity forecaster the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) is expecting global wheat prices to average $US300 a tonne in 2014–15, compared with $US317 a tonne in 2013–14. ABARES expects the world wheat supply to remain high at 888 million tonnes.With Reuters.