In a previous decree on Oct. 30, wheat import tariffs had been suspended until the end of this year.
Wheat took on greater strategic importance amid the coronavirus pandemic when countries focused on domestic consumption rather than foreign trade, and countries’ wheat stocks rose significantly.
On Dec. 15, Russian Prime Minister Mikhail Mishustin signed a list of orders aimed at stabilizing food prices, including a grain export quota and a wheat export tax.
Chicago wheat futures edged higher yesterday as traders assessed the extent to which a Russian export tax may curb shipments from the world’s top supplier of the cereal. The most active wheat futures on the Chicago Board of Trade were up 0.8 percent at $6.03 bushel yesterday.
Russia, which supplies wheat to major importers such as Turkey, Egypt and Bangladesh, has decided to introduce a wheat export tax of 25 euros ($30.40) per ton within a quota of 17.5 million tons from Feb. 15 to June 30 next year. If export volumes exceed the quota, the tax for wheat would rise to 50 percent of the customs price or 100 euros per ton, whichever is higher. The tax could reduce Russia’s 2020-2021 wheat exports by 3 million tons to around 38.8 million tons.
Some traders and analysts expect Russian exports to be curbed, as evidenced by uncompetitive offers of Russian wheat in a tender held by Egypt on Dec. 15.
However, with year-end holidays approaching and a bumper Australian harvest coming in the market, the impact on wheat export markets may not be clear immediately, according to traders.
“The market continues to consolidate after the tumult created by Russia’s export tax announcement,” said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia.
Global wheat production totals some 770 million tons annually, of which 20 million tons is overproduction, according to the International Association of Operative Millers (IAOM) Eurasia.
While global wheat stocks total around 320 million tons, China holds around half of these stocks with 163 million tons, up by 7 million since the beginning of this year.