Russia Hikes Wheat Export Tax by 41% Amid Closed-Door Talks with Exporters

Russia has raised its wheat export tax by 41%, from 1,328.30 rubles to 1,872 rubles ($333) per metric ton, effective October 16, 2024. This change comes as the Agriculture Ministry held a private meeting with major exporters to discuss this year’s sales.

The tax hike reflects higher prices for Russian wheat in Saudi Arabia’s recent tender. Bids ranged from $230 to $243 FOB (free on board) at the October 7 auction. The increase may aim to curb Russian sales to other countries, as exports have reportedly exceeded reasonable levels.

The influential grain exporters union has accused unnamed exporters of shipping excessive volumes at low prices. They plan to ask the Agriculture Ministry to review the quota distribution system for the second half of the season.

Currently, the ministry allocates export quotas from February 15 to June 30. Some traders believe the tax increase could have been more significant.

One European trader commented that the market might fall, as people had anticipated higher risks. The Agriculture Ministry has not yet allocated export quotas for the current season.

Russia, the world’s largest wheat exporter, has slightly lowered its official harvest estimate from 132 million to 130 million tons. This adjustment comes despite unfavorable weather affecting many grain-producing regions this year.

Russia Hikes Wheat Export Tax by 41% Amid Closed-Door Talks with Exporters

The government appears to be taking steps to reduce wheat exports and keep domestic bread prices low. The country has been struggling with inflation, currently around 9%.

The central bank is expected to raise interest rates further this month from the current 19%, the highest since April 2022. Independent consultancy Sovecon has published lower grain harvest estimates, forecasting 122.9 million tons.

Russian farmers have harvested 122 million tons of grain so far, from 92% of the sown area. Agriculture Minister Oksana Lut stated on October 10 that this year’s harvest is sufficient to meet domestic market needs.

She estimated domestic grain consumption at 85-87 million tons, with the remainder available for export.