Wheat soars as Russia considers export tax

By Onome Amuge

Russian wheat export prices have witnessed an uptick ahead of a new export tax of 25 euros a tonne about to be imposed by the world’s largest wheat exporter, a move, market analysts say is targeted at curbing domestic food inflation fueled by the covid-19 pandemic.

The Russian Ministry of Economic Development has also released a statement announcing a further increase in the country’s wheat duty, expected to double to 45.36 euros a tonne on March 1.

The country’s Institute for Agricultural Market Studies (IKAR) said the wheat with 12.5 per cent protein loading from Black Sea ports for supply before mid-February was at $298 a tonne free on board (FOB) at the end of last week, up $23 from the previous week.

Savecon, another Russia-based consultancy explained that many traders remain short and are in a hurry to get grain and ship it before February 15.

Savecon added that risks for Russia’s 2021 grain crop remain high despite good snow and rains in many winter wheat regions in the first half of January. Cold weather expected in the south this week, it said, will pose risks if it stays more than a few nights.

Andree Defois, president of consultant Strategie Grains, said Russia plays a vital role in global supply and its grain would still be needed in the latter part of the season as the world cannot afford to go without Russian wheat.

The export tax is expected to put pressure on many import-reliant countries including Nigeria, which, according to market reports, purchases large amounts of wheat from the European powerhouse annually because its prices are more affordable compared to other sources.

Wheat, considered an excellent ingredient in the production of bread and confectionery is one of Nigeria’s major imported food commodities and Russia, alongside the U.S are key import destinations for the country’s flour millers.