RUSSIA - Russia's wheat exports have greatly reduced since the government started taxing overseas shipments as a way to reduce local food prices, reports Bloomberg.
The country will sell 65 per cent less wheat in March than the previous year, according to estimates from ZAO Rusagrotrans, which carries grain by rail.
In February, when the tax took effect, exports plunged 45 per cent, government figures show.
The declines represent a turnaround for Russia’s international wheat business that last year sold more grain to overseas buyers than any country except the US, Canada and France.
Many grain buyers have switched to European sellers as the weakening euro makes purchases cheaper, according to Igor Pavensky, a deputy director at Rusagrotrans.
“Our place on the market has largely been taken,” he said. “Supplies from Europe are record- breaking.”
Russia will export 450,000 metric tons of wheat this month, compared with 1.3 million tons a year earlier, Pavensky said. ProZerno, a Moscow-based market research firm, estimates shipments of at least 600,000 tons, according to Director General Vladimir Petrichenko.
The tax has been successful in lowering the cost of domestic wheat. Shrinking demand from exporters cut farm-gate prices in Russia’s south almost 20 percent from the season’s high in mid-December to about 9,600 rubles ($168) a ton this week, according to data compiled by Rusagrotrans.
Price declines steepened last week as farmers began to sell inventories to raise cash to fund spring planting, according to Moscow-based market researcher SovEcon.
The tax, due to run until June, is 15 percent of a shipment’s total value, plus 7.50 euros ($8.19) a ton.
With less supply coming from Russia, buyers have turned to countries such as Germany, France and Romania. European Union regulators have issued export licenses for 23.7 million tons for wheat since 1 July, putting shipments on track for a record, according to data from the bloc.
Russia’s exports didn’t dry up completely over the last two months because it’s been profitable for traders to purchase grain at current low prices and sell it overseas, according to Swithun Still, director of Solaris Commodities SA in Lausanne, Switzerland.
Still, the tax’s impact on shipments is ongoing, according to Dmitry Rylko, director of the Moscow-based Institute for Agricultural Market Studies.
“These exports look like they continue only because of earlier momentum,” he said.
“All export channels work, but not as intensively as they might have worked without the restrictions.”
TheCropSite News Desk