MOSCOW: Russia announced a 41% increase in its wheat export duty on Friday, as the agriculture ministry convened a closed-door meeting with the country’s top exporters to discuss this year’s exports where restrictions are expected to be on the agenda.

The duty will rise to 1,872 roubles ($19.51) per metric ton on Oct. 16, up from 1,328.3 roubles previously. The new duty reflects higher prices for Russian wheat at Saudi Arabia’s wheat tender held on Oct. 7, which ranged from $230 to $243 free on board.

The raised export duties could be a measure to curb exports, which, according to the influential grain exporters’ union, “exceeded reasonable parameters based on the export potential” in the first quarter of the 2024-2025 season.

The union accused unspecified exporters of shipping excessive volumes at low prices and said it would ask the agriculture ministry to review the quota distribution mechanism for the second half of the season.

Under the current system, the ministry allocates export quotas for the second half of the export season from Feb. 15 to June 30, with volumes depending on shipments in the quota-free first half. Traders said the duty increase could have been larger. “It’s not very bullish in the end if that’s all they’re announcing. It’s like $5-$6 a ton. People were pricing bigger risks, so the market might come off,” a European trader commented.

EXPORT QUOTAS

The agriculture ministry has not yet allocated export quotas for the current season. One source suggested that the quota distribution among exporters could be discussed, with some reduction compared to the same period last year. Russia, the world’s top wheat exporter, slightly revised its official estimate for this year’s harvest to 130 million tons from 132 million tons previously, despite bad weather affecting many grain-producing regions this year.

“The Russian government appears to be taking a serious course to reduce wheat exports; it seems they want to keep Russian bread prices down,” another trader said.

Russia has been struggling to combat inflation, currently running at about 9%, with the central bank expected to hike interest rates further this month from 19%, the highest since April 2022.

Independent consultancy Sovecon published substantially lower grain harvest estimates on Friday, forecasting the harvest at 122.9 million tons, down from 124.4 million tons previously, citing lower yields in Siberian grain-producing regions.