RUSSIA - Despite the export tax which has been imposed on it since February, Russian wheat is now looking competitive on the world market once again.
Immediately after the introduction of the tax, Russian wheat offers disappeared from global markets as it could not be sold competitively.
However, in tenders from Egypt and Iraq in the past few days, Russian wheat has once again proved competitive with other origins.
Although most of the wheat estimated to be exported from Russia this season was shipped before February (read more here), there were signs of a slowdown following introduction of the tax.
With spring rapidly progressing, cash flow is critical for Russian farmers at this point in the season, as the majority of Russian wheat is spring sown.
This has reportedly increased selling pressure from Russian farmers in the last week. Coupled with high stocks levels (perhaps due to slower exports since the export tax came into action), this has led Russian domestic prices to decline, making the origin competitive on the world market despite the export tax.
The export tax is due to expire at the end of June, and there is uncertainty over whether it will be extended.
Nevertheless, Russian wheat could provide stiff competition on the world market to European wheat between now and the end of the season.
TheCropSite News Desk