HAMBURG: European wheat futures on Tuesday hit 7-1/2 year highs on reports that Russia plans higher than expected wheat export taxes and as the US Department of Agriculture (USDA) cut its forecast of US corn and soybean supplies.

March milling wheat on Paris-based Euronext unofficially closed up 5.50 euros, or 2.5%, at 223.50 euros ($271.98) a tonne.

It earlier hit 225.00 euros, a life-of-contract peak and highest front-month price since May 2013.

Paris had been up 3 euros before the USDA’s world supply and demand report was issued at 1700 GMT. US wheat, corn and soybeans surged after the USDA said US soybean and corn supplies will be smaller than previously forecast due to a reduced estimate of last autumn’s harvest.

Russia will consider changes to its wheat export tax by the end of this week, its economy ministry said on Tuesday, a day after sources said the leading exporter may increase the tax to 50 euros ($60.78) per tonne from the previously planned 25 euros ($30).

The move could cut Russian competition in world markets to EU wheat.

“The potential increase in the Russian tax is predictably preventing wheat from easing off,” one futures dealer said. “Plus you have Egypt coming out at the same moment for a tender.”

Egypt’s state grain buyer GASC on Tuesday cancelled an international tender to buy wheat after receiving an unusually low number of offers, with Russian wheat exporters unwilling to participate because of the expected export tax.