Russia is the world’s largest wheat exporter but amid concerns about domestic inflation, the government has been enacting policies affecting trade. In February, a new export quota of 17.5 million tons for wheat, barley, corn, and rye was implemented for the period February 15-June 30.
In addition, an export tax of 50 Euros/ton was put into place March 1. A key impact of these policies was to shift the timing of shipments in recent months. Key importers such as Turkey and Egypt accelerated their purchases before the implementation of the new quota and tariff.
As a result, Russia’s exports soared to over 4 million tons in February but fell to slightly above 1 million tons in March. Exports in April and May were reportedly also muted but are forecast to be unseasonably high in June because of a change in trade policy. The fixed export tax of 50 Euros/ton has been replaced by a floating export tax based on benchmark factors.
The floating export tax fell to $28/ton the first week of June, lifting slightly to $29/ton the second week. Ample supplies have been stockpiled and prospects for the new crop are generally favorable. This, as well as the lower duty relative to the prior month, are expected to boost Russia exports sharply in June, the final month of the marketing year when shipments typically decline.
The uncertainty around forward contracting in light of the floating tax have increased some of the challenges that exporters and buyers face. Nevertheless, Russia is forecast to further expand its exports in 2021/22 and remain the top exporter.
Not only will it have abundant supplies while entering the new year, but the new crop is also expected to be at a record 86.0 million tons.