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Russia could raise wheat export duty to 50%
"The idea is currently being floated of revising the parameters of the export duty by increasing the duty on wheat to 50%," Arkady Zlochevsky, president of the Russian Grain Union, said at an annual meeting of the National Food Exporters Union in Moscow on Thursday.

The government is discussing the possibility of raising the duty, and the Federation Council has prepared material "with a categorical demand to introduce immediate restrictions," he said.

Raising the duty is basically the equivalent of cutting off wheat exports, Zlochevsky said.

Noting that the government had recently imposed a 10% export duty on wheat but not less than 22 euros per tonne, he said. The terms don't restrict exports but only reduce the profitability of exporters to the minimum. "Nonetheless grain exporters are thinking about whether to sign December contracts, and the contracts signed earlier will be met since the introduction of duty is not a force majeure situation," he said.

Zlochevsky said the export duty is a sort of limit on the growth potential for prices on the domestic market. "If the duty is raised even to 20% - 30% it will be a serious restriction, basically a ban and bas4ed on the preliminary balance 12 million tonnes of grain must be exported," he said.

Zlochevsky said the model of the world grain market depends on Russia's behavior and aggravating the situation with grain exports could result in a further rise in world prices. When the 10% duty was announced and the market realized there was no threat of a lack of Russian wheat it began to fall, and now FOB shipments have dropped to $320 per tonne from $350 per tonne a week ago. If a 50% duty is introduced the world market will move to $400 per tonne with all of the consequences, he said.

"Unfortunately, the government doesn't understand this and is looking only at the domestic situation, the conditions in the country and inflationary processes in the food sector,' he said.

Zlochevsky said the situation on the grain market could be complicated by product intervention on October 29 - 31. "The grain union is opposed to this and feels intervention should not be conducted until next January," he said.

Zlochevsky said laws are needed that will prevent the authorities from limiting exports except in extreme situations. "If such situations arise restrictions could be imposed by the executive branch and all other decisions should be made legislatively, not through government resolutions," he said.
MGR Archive 21.10.2007
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Region Type Price  
Russia Rapan $ 700
USA Jupiter Rice $630
USA Calrose #1 $830
USA Calrose #1 Paddy $480
EU Prices Baldo €660
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