Frontrunner - 18th December 2020

Russia, the world’s leading wheat exporter, officially confirmed it would introduce a €25/t export tax in the new year. The tax will be applied to its 17.5-million-tonne export quota, which begins on the 15th February and runs to the 30th June 2021. Traders are unlikely to exceed the quota in light of the news that tonnage which surpasses this figure will be taxed at 50% of the sales value.

Market reaction was initially negative due to concerns that traders may step up their sales and shipments ahead of the introduction of the tax. However, that might prove difficult with reports of delays in obtaining documents from the Russian customs service. Overall, this political interference is bullish for world markets and prices have risen this week; although not for Russian farmers. Analysts have highlighted that there will now be less Russian wheat available to ship this season, cutting estimates from almost 41 million tonnes to less than 38 million tonnes.

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