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Russian farmers set up wheat sales, as export quota proposal looms

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Russian farmers are accelerating sales of wheat amid concerns over the introduction of export quotas on the grain next year, SovEcon said, noting pressure too for curbs on shipments of sunflowers.

 

“Just in the last week or so, we have begun to see farmers increase sales of wheat,” Andrey Sizov, the SovEcon managing director, said.

 

The increase reflects in part a strengthening rouble which started to appreciate from the previous week after touching 80 per $1 for the first time since March.

 

However, it also reflects mounting concerns that the country will reintroduce a ceiling on export volume, which Moscow imposed for the April-to-June quarter of this year.

 

SovEcon reported Russian wheat export prices falling by $1.50 per tonne last week to $235 per tonne in deep sea ports, with some easing in rouble prices too, despite buoyancy in prices on international futures markets, in the likes of Chicago and Paris.

 

 

 

Market talk suggests that Russia’s agriculture ministry will later this month unveil proposals for a fresh quota, likely expanded to cover the January-to-June period of 2021.

 

The size of the quota has yet to be determined, although it will “likely be close to the actual export surplus”, Mr Sizov told Agrimoney, highlighting President Vladimir Putin’s desire to promote Russia as a shipper of the grain, and the need for approval from the country’s economy ministry.

 

The economy ministry last year rejected the agriculture department’s initial proposal for wheat export curbs, for fear of breaching World Trade Organization rules.

 

Nonetheless, while foreign investors are focused on Russia for its dryness issue as a reason to buy wheat, domestic producers are looking at the potential export curbs as a cause for selling.

 

Record high prices of sunflowers, which growers typically market well ahead of wheat, “imply farmers have enough cash”, meaning they do not need to sell wheat for financial reasons, Mr Sizov said, reminding on the dryness issue that Russia’s crop is typically “made” around April-May, rather than in the autumn.

 

 

 

Sunflower seed prices have soared above 30,000 roubles per tonne, according to SovEcon from levels around 20,000 roubles per tonne even into August, as dryness curtailed the country’s harvest – and that in neighbouring Ukraine, the top producer, too.

 

Russia’s sunflower seed harvest had come in at a yield of 1.69 tonnes per hectare so far, down from 2.17 tonnes per hectare last year, the influential Moscow-based analysis group said.

 

The prospect of tighter supplies has prompted the Russian oilseed crushers lobby to call for an increase to 20% in the country’s sunseed export tax, from a current rate of 6.5%.

 

“The industry is obviously keen to protect domestic supplies, and stop them getting into the hands of exporters,” Mr Sizov said.

 

“However, we doubt that anyway there will be much export demand at these prices,” he said, flagging too that a 20% levy would likely breach WTO rules.

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