The pace of Russia's wheat exports during marketing year 2021-22 (July-June) remained poor and the decline in exports has led to a sharp fall in prices too.
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Between July 1 and Jan. 13, Russia exported 22.7 million mt, down 18% year on year, according to the Russian Federal Service for veterinary and Phytosanitary Surveillance data released on Jan. 17.
Russia is the world's largest wheat exporter.
As of Jan. 13, Turkey was the largest buyer of Russian wheat, purchasing 4.6 million mt, followed by Egypt at 3.5 million mt and Kazakhstan at 1.7 million mt.
S&P Global Platts Analytics projected Russian 2021-22 wheat exports at 36.5 million mt.
Russia sold 38.5 million mt of wheat in 2020-21, according to data from the US Department of Agriculture.
The country's 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 has declined in MY 2021-22 due to adverse weather conditions, particularly dry and warm summers.
Platts Analytics has projected Russia's wheat crop at 77.6 million mt in MY 2021-22.
Export prices soften further
Export prices of Russian wheat has been on the decline over the last few weeks as export shipments have been slow. Wheat exports prices have shed over 4% on the month due to the sluggish exports.
The primary reason for the poor momentum of exports has been repeated interventions from the Russian governments to keep domestic wheat prices under check.
Last month, Russia introduced new export tax mechanisms and imposed an export quota.
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 the 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.
However, with a decline in export prices, the government has reduced the export tax week on week for Jan. 19-25.
On Jan. 14, the ministry decreased the variable export tax for wheat to $97.50/mt, from $98.20/mt in the previous week.
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 $329/mt Jan. 14.
Demand for the Russian crop are seen declining in the coming weeks as global wheat prices have softened over the past few weeks.