Russia’s worsening food inflation is fueling concerns that the world’s largest wheat exporter could introduce a wheat export quota for its current crop, further squeezing global wheat supplies.
That could push up already high wheat prices for bread manufacturers and baked goods makers, and risk fanning further global food inflation for the staple food item.
In the past year, export prices for wheat from major origins have increased between 12% and 47%. Prices of Black Sea milling wheat, which includes Russian wheat, have jumped 42%.
In response to spiraling domestic food inflation, Russia introduced a permanent floating-rate tax on wheat exports this summer. The tax, together with adverse growing conditions earlier this year, may push Russia’s 2021/22 wheat exports for the February-June period to well below the USDA’s latest WASDE estimate of 35 million tonnes. Last year Russia exported 38.5 million tonnes of wheat.
Additionally, Russian exporters are likely to frontload exports, which can be followed in this chart, in anticipation of a possible new wheat export quota in February. Russia’s last wheat export quota expired in June. Gro’s webinar from earlier this year, “Will Trade Restrictions and Crop Prospects Curtail Wheat Supplies?,” examined in depth the relationship between trade and supplies.
Global wheat supplies also are tight due to drought conditions in the US and Canada. Southern Hemisphere harvests may be needed to relieve the pressure.
Australia is currently on course for another bumper crop, according to Gro’s recently launched Australia Wheat Yield Forecast Model, which provides users with daily updates on the important Australian crop weeks ahead of official government estimates.
Argentina, another top producer, is expected to reach record levels of production in 2021/22 along with record wheat exports. Gro’s Navigator for Agriculture - Growing Conditions App, weighted to Argentina’s wheat area, shows above-normal NDVI, a key determinant of yields.
India, following a bumper crop in 2020/21 as reflected in Gro’s India Wheat Yield Forecast Model, may also benefit from higher export volumes.