Russian Wheat Exports Set for Record as Tax Cut Spurs Trade

Updated on

Russia will ship more wheat overseas this season than anytime in history, helped by a surge in exports in May and June, according to ZAO Rusagrotrans, which transports grain by rail.

Traders will probably sell 21.5 million metric tons of wheat overseas in the 12 months through June 30, according to Igor Pavensky, the Moscow-based deputy director of marketing for Rusagrotrans. That exceeds the record from the season that ended in 2012, when exports totaled 21.3 million tons, Russian Federal Customs Service data show.

Russia, the fourth-biggest wheat exporter, has seen international sales accelerate since May 15 after scrapping an export tax designed to increase domestic supplies and lower bread costs. The grain harvest was the second-biggest on record, and Pavensky said traders have “substantial” wheat stockpiles to sell before a new tax takes effect on July 1.

Wheat prices on the Chicago Board of Trade fell 13 percent this year, falling to their lowest since 2010 in May, after bumper harvests in the European Union, Russia and Ukraine expanded global reserves. The contract for delivery in July rose 0.2 percent to $5.13 3/4 a bushel on Wednesday.

Exports were highest at the start of the season in 2014 after the ruble’s decline made purchases cheap for overseas buyers. Shipments surged in January as traders rushed to sell wheat before the tax, and then slowed for three-and-a-half months while the levy was in place.

Russia also exported 700,000 tons of wheat to Kazakhstan this season, compared with none in the season that ended in 2012, Pavensky estimated. Government statistics don’t register these cargoes because the country is part of a Russia-led customs union, he said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE