Russia's 2021-22 wheat exports fall 21% on year, prices recover slightly

The momentum of Russia's wheat exports during marketing year 2021-22 (July-June) was slow, however, export prices have increased slightly after a sharp fall in the weeks before.

Between July 1, 2021, and Jan. 20, Russia exported 23 million mt wheat, down 21% year on year, according to the Russian Federal Service for Veterinary and Phytosanitary Surveillance data released Jan. 24.

Russia is the world's largest wheat exporter.

As of Jan. 20, Turkey was the largest buyer of Russian wheat, purchasing 4.6 million mt, followed by Egypt at 3.6 million mt and Kazakhstan at 1.8 million mt.

S&P Global Platts Analytics has estimated Russian 2021-22 wheat exports at 36.5 million mt.

Russia had sold 38.5 million mt of wheat in 2020-21, according to data from the US Department of Agriculture.

The country's MY 2021-22 wheat harvest was at 79.1 million mt as of Dec. 30, 2021, lower than 88.1 million mt produced a year ago, according to the agricultural ministry.

Russia's wheat output is expected to fall in MY 2021-22 due to adverse weather conditions, particularly dry and warm summers.

Platts Analytics has projected Russia's wheat crop at 77.6 million mt in MY 2021-22.

Export prices recover slightly

Export prices of Russian wheat have recovered slightly after the sharp fall over the past few weeks.

Wheat export prices have shed more than $9 on the month due to the sluggish exports and rising tensions between Russia and Ukraine.

The slow pace of exports have come at a time when the Russian government has been intervening in the market in a bid to keep domestic wheat prices under check.

Last month, Russia introduced new export tax mechanisms and imposed an export quota.

According to the new regulations, the export tax will have a higher multiplier if wheat prices reach $375/mt, while the tariff will increase further if prices reach $400/mt.

The variable export tax was introduced in Russia on June 2, 2021, to limit the domestic grain price rise.

The export tax is calculated as 70% of the difference between the average of export prices on an FOB basis during the 60 days preceding the day of calculation and $200.

However, with a decline in export prices, the government has further reduced the export tax week on week for Jan. 26 to Feb. 1.

On Jan. 21, the ministry decreased the variable export tax for wheat to $95.80/mt from $97.50/mt in the previous week.

Also in its attempt to check the domestic price rise, Russia has set the export quota on wheat at 8 million mt between Feb. 15 and June 30.

S&P Global Platts assessed FOB Russia 12.5% protein wheat steady day on day at $330/mt on Jan. 21.

However, prices may see some volatility due to the ongoing border tensions between Russia and Ukraine, which may also weigh on demand for wheat from the Black Sea region, traders said.