Russia’s MY 2021-22 wheat exports lose momentum, down 18% on year

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The momentum of Russian wheat exports during marketing year 2021-22 (July-June) remained slow with the year-on-year gap in exports at 18% in the week to Dec. 30, according to data released on Jan. 12.

During July 1 to Dec. 30, Russia exported 21.6 million mt, according to the Russian Federal Service for veterinary and Phytosanitary Surveillance data released on Jan. 12.

Russia is the world’s largest wheat exporter.

Turkey remained the largest buyer of Russian wheat during the year, buying 4.5 million mt as of Dec. 30, followed by Egypt at 3.2 million mt and Kazakhstan at 1.6 million mt.

S&P Global Platts Analytics has projected Russian MY 2021-22 wheat exports at 36.5 million mt.

Russia sold 38.5 million mt of wheat in MY 2020-21, according to data from the US Department of Agriculture.

The country’s MY 2021-22 wheat harvest was at around 79.1 million mt as of Dec. 30, below from 88.1 million mt produced a year ago, according to the agricultural ministry.

Russia’s wheat output was expected to decline in MY 2021-22 due to adverse weather conditions.

Platts Analytics has projected Russia’s wheat crop at 77.6 million mt in MY 2021-22. Russia harvested 85.9 million mt of wheat in MY 2020-21.

Export prices see choppy trade

Export prices of Russian wheat has seen choppy trade over the last few weeks as Russia introduced new export tax mechanisms and imposed an export tax.

According to the new regulations, the export tax will have a higher multiplier if wheat prices reach $375/mt, while the tariff will increase further if the prices reach $400/mt.

The variable export tax was introduced in Russian on June 2 to limit domestic grain price rise.

The export tax is calculated as 70% of the difference between the average of export prices on a FOB basis during the 60 days preceding the day of calculation and $200.

On Dec. 30, the ministry increased the variable export tax for wheat to $98.2/mt, up from $94.9/mt earlier.

To check the domestic price rise, Russia has also set the export quota on wheat at 8 million mt between Feb. 15 and June 30.

Amid the confusion over the tariff mechanism and export quota, FOB prices saw volatile trade during the week.

S&P Global Platts assessed FOB Russia 12.5% protein wheat down 75 cents/mt at $336/mt Jan. 11.

Due to the continued government restrictions, export prices have lost over 2% on the month.

However, traders saw prices increasing over the next few weeks, as buyers may look to source wheat for their requirement before the export quota kicks in.

 

S&P Global Platts

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