Global wheat soars on Russia export tax
World grain and wheat markets soared to fresh multi-year highs as Russia moved to dramatically slow grain exports to cool soaring food costs.
United States wheat futures soared 6 to 8 per cent higher last week with nearby CBOT hitting its highest level since 2014 on Russia’s plan to impose a higher export tax from March 1, in another push to curb spiralling food costs.
Russia said it would impose a wheat export tax of 50 euros a tonne ($A80) from March 1 to June 30. Earlier Russia flagged a 25 euros export tax would start from February 15, but this will now climb to 50 euros at the start of March. Russia also set a barley and corn export tax at 10 euros/t and 25 euros/t, respectively, starting from March 15.
Global wheat prices rocketed higher on the news, with many buyers grappling with where they will source supplies if Russian wheat is not available or too expensive. Black Sea wheat prices jumped $US25/t last week to around $300 FOB, having rallied by near $50/t in the past six weeks.
Russia has exported about 24 million tonnes of wheat from July to December of the USDA’s forecast 39mt for the July/June marketing year. This leaves Russia with an improbable 15mt of wheat to be exported through the second half of the marketing year when most of the exports will be burdened with the prohibitive export tax.
Demand for Australian wheat will benefit from the Russia export tax, as well as Canada and the United States.
However, Australian wheat exports will be limited by available export capacity between January and June. Most of the available export capacity in Australia is already fully booked for the next six months after the bumper winter crop harvest.
Domestic wheat prices continue to lag gains seen in global markets in the past month or so, partly due to the strength in the Australian dollar. Northern NSW wheat bids have climbed by around $16/t in the past four weeks to $306 Newcastle on Friday.
Unsettled weather offered more scattered storms in the past week with more expected in the coming days. TC Kimi is already delivery heavy rains around Cairns and is likely to result in increased storm activity for the Central Highlands and southern Queensland late in the week.
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