Exports of Russian wheat will stretch well into the second half of the season as Moscow’s export tax and tough competition with Ukraine and Romania slow sales until the end of 2021, traders and analysts said.
Russia, the world’s largest exporter of wheat, generally sells most of its crop during the first half of its marketing season, which starts on July 1.
However, exports are down so far this season with farmers holding on to grain from a smaller crop and forward sales impeded by the wheat export tax, which changes each week.
SovEcon consultancy estimates that exports in the first two months of the season will total 5.3 million tonnes, down from 7.0 million by the end of August a year ago.
Russian sales to Egypt’s state-run General Authority For Supply Commodities (GASC), a major buyer, are relatively low so far due to competition with Ukraine and Romania, which are both harvesting good crops this year.
The wheat export tax, meanwhile, is expected to continue rising in coming months but unpredictability over the exact level makes it hard for traders to book sales with delayed shipping.
“It is easier for traders to sell Russian wheat to markets with quick supply periods, not to the GASC which requires shipping a month or a month and a half after the deal,” Sovecon’s Andrey Sizov said.
Russia could become more active at the GASC tenders towards the end of 2021 when Ukraine and Romania have less wheat to offer, two traders told Reuters.
“There is a possibility that our non-presence at the GASC will last until the moment we remain alone there,” Dmitry Rylko at the IKAR consultancy said.
However, Russian wheat is still in demand elsewhere and new markets could open up.
IKAR expects Russia to supply a record amount of wheat to Saudi Arabia as a good quality crop will help it to compete with European countries this year, Rylko said.
Supplies to Iran will remain very high, active shipments to Algeria may emerge and exports to drought-hit Kazakhstan will jump, he added.
Sovecon expects Kazakhstan to import 2 million tonnes of Russian wheat this season.
Source: Reuters (Reporting by Polina Devitt; editing by Nigel Hunt and Kirsten Donovan)