Hot on the heal of news that Russian wheat exports hit 8.17mt up to and including the week ending August 30th, that’s a 63% increase on the same time last year, comes yet another confirmation from Russian officials that they currently have no to limit wheat exports this year.
Late last week US and EU wheat futures traded higher on rumours that Russia may limit exports of wheat with either duties or quotas. This seems to be the go to rumour to kill a few shorts of late. After the announcement Paris milling wheat futures slipped around E3.50 / tonne. US markets are likely to follow a similar path in tonight’s session once they open after the Labor Day holiday.
In stark contrast to the Russian export program the EU pace is almost half of what it was this time last year. Over the next 12 months the EU is only expected to export around 20mt of wheat, its lowest level in six years.
In true Argentine fashion President Macri has turned his back on a 2015 election promise and instead of removing export taxes on grains he intends to introduce further export taxes of roughly 10%. The current export tax on soybeans will be lowered but a new tax linked directly to the value of the peso against the USD will be introduced. It’s calculated at 4 pesos per US dollar in value. Wheat and corn fared better than oilseeds with soybeans being taxed hardest. The market is now trying to decide if this tax will change values drastically. For soybeans the net outcome after the initial reduction may see some price gains while wheat is likely to suffer somewhat.