Russia hints at new export tax rise to reignite global wheat complex

10 Nov 2021 | Masha Belikova

US and French wheat futures both jumped by around 2% on Wednesday after comments attributed to the Russian minister of agriculture stoked fears that further global price rises for the grain could lead the government to raise the level of its export tax.

The December Chicago SRW contract jumped by $0.17/bu to reach $7.96/bu at 17.30 London time, up 2.2%, while the Matif December wheat contract moved up by €7.50/mt to €293.50/mt - a 2.6% increase on the previous day.

“I believe it is linked to the news about the Russian tax,” one Europe-based trade source said.

The moves came after Dmitriy Patrushev, the Russian agriculture minister, reportedly said during a governmental meeting that in a scenario of further world wheat price increases, the government would consider revising up its formula for calculating its export wheat tax.

It is uncertain what exactly the government is going to do, but the current formula already considers raising the tax in the case of a further rise in the global wheat price.

Currently, the tax stand at $69.90/mt, but is expected to go higher as the average index price, the fundamental basis for the tax, has increased by $7.90/mt since October 29, the date of the last tax update.

The government is also expected to set a separate wheat export quota for the second half of the marketing year, which starts in February.

The volume of exports allowed by the government is expected to be determined by the volume of wheat that is left from the total export potential figure, minus the amount exported through the July-January period.

That quota will be also divided between the exporters in accordance with their equivalent market share reported during the first part of the marketing year - from July to January.