Waiting for a high harvest and lower export duties are pulling wheat prices down

Over the past week, Russian wheat on the world market has fallen in price to $ 256 per ton.

It is possible that the downward trend will continue further.

As the head of the Union of Grain Exporters Eduard Zernin noted, most of the transactions are now being carried out at a price of $ 255-258 per ton.

According to experts, the decline in prices is primarily due to positive expectations from the new harvest.

It is planned that it will be quite high — although, most likely, it will not reach the level of last year.

In addition, grain reserves from the previous harvest that have not yet been exported play an important role.

We can talk about about 4.5 million tons of wheat, which exporters have not been able to sell until now due to the current export limits (quotas).

All this means that Russia will enter the new season with decent grain reserves. And this will contribute to further price reductions.

This is true not only for export prices, but also for domestic ones.

Within the Russian Federation, the cost of a ton of wheat also dropped to values ​​of about 14,200-14,300 rubles per ton.

Reducing export duties will greatly affect the price level


June 2, 2021 is, without exaggeration, a fateful day for all grain producers and exporters.

A significant change in export duties is taking place today.

They become floating, that is, they can change rapidly, taking into account the current prices on world markets.

For example, the duty on wheat is calculated using the formula: (indicative price) minus (base price) x 70%.

Today the indicative price is $ 240.2, the base price is $ 200. As a result, the duty is at the level of $ 28.1 per ton.

This is half what it was from March to June (50 euros per tonne). Obviously, against the background of such changes, wheat exports will now revive and last year’s stocks will begin to actively sell off.

But for barley and corn, the introduction of a floating duty was an unpleasant event.

Before its introduction, the duty rates were 10 euros and 25 euros per tonne, respectively. Now — $ 39.6 and $ 52.2. That is, there is a very sharp increase.

In the current situation, producers of barley and corn can behave differently: either put up with it and start working in the current market conditions, or hold on to their stocks awaiting changes in duties.

After all, they are now floating — therefore, they can change as they like and at any time.