Russian wheat tax and quota – market implications

Russia is introducing a flat wheat export tax of 25 EUR/mt (EURUSD = 1.21). What does that mean for global wheat market?

Russia is introducing a flat wheat export tax of 25 EUR/mt (EURUSD = 1.21). The tax is to become effective from February 15 to June 30. The tax will be accompanied by 17.5 MMT grain (wheat, corn, barley, rye) export quota for the same period. This has been confirmed today officially by AgMin and the Ministry of Economy.

This is likely to result in smaller Russian wheat exports due to the increased use of wheat domestically for feed and most likely bigger carry-over as some grain owners could postpone their sales till 2021/22.

Our expectations at this stage:

  • 2-4% rise in FOB prices for Dec-Jan shipment
  • 2-3 MMT lower Russia’s wheat exports in 2020/21, i.e. 37.8-38.8 MMT (November estimate is 40.8 MMT)
  • Tax will be mainly absorbed by Russian grain owners, domestic wheat market could fall by around 10% in the next 1-2 months. A decline in corn and barley prices is expected to be smaller.

We will reassess this shortly after getting a better understanding of the domestic market reaction. The next export and S&D update is to be released in around 10 days or earlier.

On November 19, we published a note for the clients saying that the Russian wheat export tax risk was “substantial” and gave an estimate of 30-50% probability that it could happen. Chicago and Paris didn’t pay any attention because everyone was sure at the time that Russia would introduce a relatively non-restrictive quota and wheat export tax was completely off the radar.


Follow the Black Sea grain market

Get your free trial of The Sizov Report — an analytical service covering agricultural markets of Russia, Ukraine and Kazakhstan

Try for free

More Articles for You

Weekly round-up of Black Sea grain market – May 23

Russian wheat exports to tumble to 0.8 mmt in May, Ukraine is seeding corn fast despite the war

Weekly round-up of Black Sea grain market – May 16

Russian wheat exports to halve in May, no signs of de-escalation

Weekly round-up of Black Sea grain market – May 9

The weekly review of key Black Sea wheat and corn events

SovEcon ups Russian wheat crop forecast; Russia and Ukraine could export 60+ mmt of wheat in 2022/23

Russia could harvest 87 mmt of wheat in 2022; Russia + Ukraine 2022/23 wheat exports to reach 60+ mmt

SovEcon: 2022/23 Russian wheat crop and exports could be record-high

Excellent weather conditions and good inputs availability could lead to a record-high Russian wheat crop

Ukrainian 2022 grain crop to decline substantially

New Ukrainian wheat crop could decline by 19%, corn – by 34%, says SovEcon