Despite a significant drop in this year’s grain harvest, Russia is feverishly exporting grain abroad. From the second half of the agricultural season (February), the export quota is introduced, and due to the low harvest, it may turn out to be zero. In addition, this time agrarians prefer not to spend money on storing the harvest, but to sell it quickly and put it on deposit, the rates on which reach 20%.
Wheat exports from Russia in August and September equaled the record volumes of 2023, despite a smaller harvest, according to Rusagrotrans data. Thus, in August we delivered abroad 5.6 million tons (in August 2023 — 5.4 million tons), in September — 5.5 million tons (the same amount a year ago). Meanwhile, due to frosts and drought, Russia’s wheat harvest will be reduced by about 10% compared to 2023, Rusagrotrans forecasts.
The first reason for such high export rates is the expectation of export quotas, which are introduced in Russia in the second half of the agricultural year (from February), says Dmitry Rylko, general director of the Institute for Agricultural Market Conditions (ICAR). The second reason is that the existing export duties do not encourage farmers to store grain. Experts predict that in the second half of the agricultural season world grain prices will go up, but in the domestic market a significant part of this increase can be “eaten” by the duty, so farmers will not earn more. And now, after a quick sale, the money can be put on deposit with a relatively high interest rate and thus “at least something to pay off”. In addition, this year there is more competition on the Black Sea — there are many new traders who want to become prominent exporters and get export quotas for the second half of the year, explains Rylko.
Despite a lower harvest this year, Russia will remain the leader in wheat supplies to the world market
According to Vladimir Petrichenko, general director of the analytical company ProZerno, Russia’s grain export potential this season will decrease by 22-23 million tons to 48.7 million tons against 72.2 million tons last season. In this regard, the quota for the second half of the year may turn out to be zero. But despite all this, according to Petrichenko’s forecasts, Russia will remain the leader in wheat supplies to the world market (40.4 million tons against 54.1 million tons last season).
The Ministry of Agriculture of the Russian Federation still maintains its forecast for the grain harvest at 132 million tons. The export potential in this case could be up to 60 million tons, Agriculture Minister Oksana Lut recently estimated.