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Despite Grain Export Restrictions, Russia to Reclaim Top Wheat Export Position

13.01.2021 10:50 "Agro Perspectiva" (Kyiv) According to the report of the USDA Grain: World Markets and Trade (January 2021), in December 2020, the Russian government announced trade-restrictive measures for certain grains and oilseed products in response to high domestic prices. This comes despite record wheat production and near-record production for total grains. Russia was the largest wheat exporter in 2017/18 and 2018/19 and is forecast to rebound to again be the leading exporter for 2020/21, despite these new tradedistorting measures which have pressured global prices higher.

The new measures include the introduction of an export quota of 17.5 million tons on specified grains, including wheat, rye, barley, and corn, to be in effect

from February 15 to June 30, 2021. Within this quota, wheat will face an export tax of 25 euros per ton, and above the quota will face a tax of 50 percent, but not less than 100 euros per ton. Barley, corn, and rye are not subject to a tax within the quota, but given low anticipated trade volumes during this period, coarse grains are unlikely to be substantially restricted by the measure. Russia has only once exceeded a combined volume of 17.5 million tons between February and June for these

grains. As a result, the wheat export forecast was trimmed only slightly this month, with the in-quota tax expected to dampen competitiveness.

Already between July and December, Russia has exported around 25 million tons of wheat, nearly twothirds of the forecast for the year and almost exceeding the full-year forecast of the United States, the next largest global exporter. Russian exporters have already sought to increase shipments in advance of mid-February, and shipments thereafter are expected to decline seasonally. Given Russias record production and export restrictions, its ending stocks are expected to rise. This is

notable since most other major wheat exporters stocks are declining this year.

Russias top wheat markets are beginning to respond to these measures. As the largest global wheat importer, Egypt relies on Russia for more than half of its imports.

However, Egypts recent tenders have sourced instead from Ukraine and Romania for February shipment. Turkey typically originates about three-quarters of its wheat imports and more than half of its other grain imports from Russia. The Turkish government has extended its zero import tariffs on wheat, corn, and barley in its own attempt to keep prices low for consumers.

Bangladesh has also recently been a significant wheat market for Russia. However, it is beginning to shift its purchases toward India. Until recently, Indias exports had been minimal with its domestic support price making it uncompetitive. But with strong global demand and tight exportable supplies from traditional exporters resulting in higher export prices, India is now relatively competitive to its nearby markets such as Bangladesh with its forecast rising to the highest in 6 years.

This is not the first time that Russia has imposed trade-restrictive measures on its grain, but now as Russia accounts for higher production and proportionally more export share, the restrictions have a larger impact in the global arena. Russia is projected to account for 20 percent of global wheat trade, even with a downward adjustment to account for these new measures.

Agro Perspectiva

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