Cut and paste with a few bits added by me.
Russian Export Tax on Wheat
After President Putin criticised food price inflation last week, rumours of an impending Russian Wheat export tax quickly surfaced. This news initially rallied global futures around AUD $25/mt with cash markets following with a less aggressive move. This rally was driven by uncertainty and the announcement of the actual export tax by the Russian Ag Ministry on Tuesday, saw much of the gains given back - despite the announcement being in line with the market expectations. The tax will be 2200 rubles, which is around $30 USD/mt or nearly $40 AUD/mt.
The tax will be rolled out in conjunction with an export quota, which serves to allocate and cap the amount of exports of Wheat, Barley and Corn for the same 15 Feb - 30 June period. Both together are designed to lower the local Russian wheat price, easing food price concerns.
As the major Wheat exporter in the world, any change in the Russian wheat position is a change for the world and depending on a few things, this tax may either lower the local price in Russia, or it may just rally the world market and local Russian prices remain the same. The actual impact of this tax on Australian wheat prices is in the hands of the Russian grower (and Russian weather).
We saw an immediate reaction to the tax, with local Ruble wheat prices dropping initially half the tax amount, followed by the full amount of about 2000 Rubles. Consequently Russian growers are no longer actively selling their wheat and our intelligence suggests this is likely to remain the case. As a result global export wheat values have firmed over the past few days with European, Ukrainian, Australian and Argentine wheat now expected to fill the void left by Russia’s absence or hesitance to sell. At the moment US Wheat remains too expensive to replace Russian wheat in most export markets with this may weigh on US futures.
Local prices commenced the week on a strong note following the rally in Chicago Board of Trade (CBOT) wheat futures however most of these gains have been lost during the week as global futures markets soften and the Aussie dollar continues to strengthen. To finish the week, last night global values firmed again on predominantly Russian news with reports of further attempts by Russian customs officials to slow down wheat exports and Russian weather forecasts of very cold temperatures in areas where winter crops have minimal snow cover. At the same time the Australian dollar tipped over 76 US cents negating some of this global strength.
Australian Crop Keeps Getting Bigger.
Many analysts are now forecasting the WA wheat crop to be 9 to 9.5 million tonnes and the Australian crop to now be 33 - 35 million tonnes. This pushes more of our export task into the back end of 2021, where we will be competing with new crop Black Sea (which will have some more Russian old crop stored due to the tax). The reality of a big Australian crop is still weighing on the market with many traders sitting on large stocks waiting for export, and the prospects of a big export program in the second half of next year.
Access to elevation (shipping) capacity in the first half of 2021 will also play an important role in managing price risk this harvest. Or worst case lack there of.
Crunch coming potentially for shipping world wide as movement ramps up.
Russian Export Tax on Wheat
After President Putin criticised food price inflation last week, rumours of an impending Russian Wheat export tax quickly surfaced. This news initially rallied global futures around AUD $25/mt with cash markets following with a less aggressive move. This rally was driven by uncertainty and the announcement of the actual export tax by the Russian Ag Ministry on Tuesday, saw much of the gains given back - despite the announcement being in line with the market expectations. The tax will be 2200 rubles, which is around $30 USD/mt or nearly $40 AUD/mt.
The tax will be rolled out in conjunction with an export quota, which serves to allocate and cap the amount of exports of Wheat, Barley and Corn for the same 15 Feb - 30 June period. Both together are designed to lower the local Russian wheat price, easing food price concerns.
As the major Wheat exporter in the world, any change in the Russian wheat position is a change for the world and depending on a few things, this tax may either lower the local price in Russia, or it may just rally the world market and local Russian prices remain the same. The actual impact of this tax on Australian wheat prices is in the hands of the Russian grower (and Russian weather).
We saw an immediate reaction to the tax, with local Ruble wheat prices dropping initially half the tax amount, followed by the full amount of about 2000 Rubles. Consequently Russian growers are no longer actively selling their wheat and our intelligence suggests this is likely to remain the case. As a result global export wheat values have firmed over the past few days with European, Ukrainian, Australian and Argentine wheat now expected to fill the void left by Russia’s absence or hesitance to sell. At the moment US Wheat remains too expensive to replace Russian wheat in most export markets with this may weigh on US futures.
Local prices commenced the week on a strong note following the rally in Chicago Board of Trade (CBOT) wheat futures however most of these gains have been lost during the week as global futures markets soften and the Aussie dollar continues to strengthen. To finish the week, last night global values firmed again on predominantly Russian news with reports of further attempts by Russian customs officials to slow down wheat exports and Russian weather forecasts of very cold temperatures in areas where winter crops have minimal snow cover. At the same time the Australian dollar tipped over 76 US cents negating some of this global strength.
Australian Crop Keeps Getting Bigger.
Many analysts are now forecasting the WA wheat crop to be 9 to 9.5 million tonnes and the Australian crop to now be 33 - 35 million tonnes. This pushes more of our export task into the back end of 2021, where we will be competing with new crop Black Sea (which will have some more Russian old crop stored due to the tax). The reality of a big Australian crop is still weighing on the market with many traders sitting on large stocks waiting for export, and the prospects of a big export program in the second half of next year.
Access to elevation (shipping) capacity in the first half of 2021 will also play an important role in managing price risk this harvest. Or worst case lack there of.
Crunch coming potentially for shipping world wide as movement ramps up.
Comment