Russia is expected to harvest record-high wheat crop this summer
Its July-June exports are normally dominated by forward sales
Sanctions have hit payment, logistics, trade finance for exports
Russian rouble is at 7-year high vs U.S. dollar
June 22 (Reuters) – A strong rouble, high export tax, ongoing problems with freight and lack of forward sales are expected to hamper the start of the new export season for Russian wheat in July despite an expected record crop, analysts and traders said.
Russia, the world’s largest wheat exporter and which supplies mainly to the Middle East and Africa, will start harvesting the new crop within days and amid Western sanctions imposed on Moscow after it sent thousands of troops to Ukraine on Feb. 24.
These sanctions have complicated the processing of payments for Russian deals in Western banks and deterred many owners of large vessels from doing business with Moscow.
“None of the problems have been solved as of yet despite statements by the Western officials,” Eduard Zernin, who heads the Russian association of grain exporters, told Reuters.
The United States has said that it is prepared to give “comfort letters” to shipping and insurance firms to help facilitate grain and fertiliser supplies from Russia.
The United Nations is leading multi-side talks aimed at boosting the supply from the Black Sea as Ukraine’s sea ports have been blocked for nearly four months.
Russia has lots of grain to offer but its exporters have to rely on spot sales instead of usual forward contracts as the effect of sanctions complicates their ability to plan business for several months ahead, Zernin added.
Another problem is the rouble currency RU/RUB, which is at a 7-year high vs the U.S. dollar – amid capital controls and a sharp drop in imports of goods – making Russian exports less competitive on the global dollar market, a Russia-focused exporter said.
High state wheat export tax, set by Russia’s agriculture ministry at $142 per tonne for June 22-28, is yet another problem along with the high cost of insurance and freight, Sovecon consultancy said.
“July sales are most likely to be below what they were a year ago,” it added.
Russia exported 1.9 million tonnes of wheat in July 2021.
(Reporting by Reuters; editing by Alexandra Hudson)
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