Russian grain exporters in crisis due to strong rubles and low prices

Russia’s Ministry of Agriculture eliminated grain export duties to support exporters, but the sector remains in dire straits. Exports rose from 3 million tons in July to 4.5 million tons in the first 20 days of August, yet total shipments since the start of the agricultural year (July 1) are only 60% of last year’s volumes. From August 27, a symbolic wheat export duty of 32.1 rubles per ton will resume, offering no real relief to the industry’s woes.

Wheat exports fell by 18.5% last year to 44 million tons, driven by declining global prices and a strengthening ruble, which rose from 100 rubles to 80.4 rubles per dollar. Prices for Russian wheat (12.5% protein) dropped to $235 per ton FOB. Pavel Lapshin from Kept predicts further export declines as ruble revenues shrink while farmers’ costs rise. Many are holding back grain, awaiting a ruble devaluation to 90 per dollar, without which profitability remains critically low, says Arkady Zlochevsky, president of the Russian Grain Union.

The Ministry has exhausted its tools to boost exports, left with only limited transport subsidies and preferential loans. Without a ruble devaluation or rising global prices, Russian grain exports are set to continue their downward spiral, threatening farmers with significant losses.

Tags: export, wheat, Russia