(Bloomberg) -- Russia, the world’s fourth-largest wheat exporter, plans to introduce export duties on cereals as it tries to rein in domestic prices that leapt amid the rout in the country’s currency.
The government will draw up proposals for the duties in the next 24 hours, Deputy Prime Minister Arkady Dvorkovich said at a meeting with Prime Minister Dmitry Medvedev outside Moscow today. Russia already has shipped out about 21 million metric tons of grains since the 2014-2015 season started July 1, with the country’s export potential seen at 28 million tons, Dvorkovich said.
Russia needs to take measures to restrict grain exports in order to stem increases in domestic prices, Valentina Matviyenko, speaker of the parliament’s upper chamber, the Federation Council, said today, RIA reported. Exports of above 28 million tons may limit domestic supplies, Dvorkovich said. Restrictions should be temporary and flexible, Medvedev said.
“At least there’s some certainty now,” Vladimir Petrichenko, director general of Moscow-based market researcher ProZerno, said by phone. “A lot will now depend on the rates of these duties.”
Wheat for delivery in March climbed 1.4 percent to $6.4125 a bushel on the Chicago Board of Trade by 11:38 a.m. London time. The grain touched $6.77 on Dec. 18, the highest since May. Milling wheat for delivery the same month climbed 1.6% to 200.50 euros ($245.88) a ton on Euronext in Paris.
Russia already began slowing shipments by denying some certificates that grain sellers and buyers need after sanitary inspections, a grain-export lobby said Dec. 17, calling the move a “covert form” of export restrictions. Russian Railways Co. suspended grain deliveries to ports for export, Interfax reported Dec. 18.
Russia is battling a currency crisis that has weakened the ruble by about 42 percent this year and raised the cost of bread. Wheat rose 4.2 percent in Chicago in the week to Dec. 19, gaining for a fourth consecutive week, amid concerns about Russian exports.
The country’s Agriculture Ministry last week boosted the price it pays for grain to bolster state reserves. Bread prices have risen as much as 10 percent in the past month, according to retailers.
Russia has already shipped 15 million to 16 million metric tons of wheat out of the 22 million tons expected by the U.S. Department of Agriculture for the season, Stefan Vogel, head of agricultural commodities research at Rabobank International, said last week.
Egypt bought 60,000 tons of Russian wheat, along with 240,000 tons of French grain, in a tender on Dec. 20.
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