Russians already suffering from surging costs for imported food as the ruble slumps are paying near record prices even for local wheat.
Farm-gate prices in southern Russia, the main grower of the grain for export, climbed as high as 11,800 rubles ($150) for a metric ton of fourth-grade milling wheat by Jan. 25, according to Igor Pavensky, director of marketing at ZAO Rusagrotrans, a Moscow-based grain carrier. That’s the highest since a record 12,300 rubles in December 2014, before the government sought to curb local prices with a series of export taxes, Pavensky said.
As the exchange-rate has weakened, farmers raised their ruble prices to bring the income they get from local sales closer to export earnings in dollars. Russia exported record levels of wheat in December, according to Rusagrotrans. The nation may become the biggest shipper in the season ending June, U.S. Department of Agriculture data show.
Deputy Agriculture Minister Sergei Levin has ordered proposals for a possible increase in limits on exports to be drawn up by Jan. 29, Interfax reported on Monday. The ministry is studying options to change the wheat-export tax, spokeswoman Yana Perepechaeva said.
The latest duty, introduced in July to try to limit shipments abroad, “has not reduced exports in any lasting way so far,” Commerzbank AG said in a research note on Tuesday. “This is because the export incentive generated by the weak currency is too powerful.”
Russia needs to consider the interests of both wheat farmers and livestock companies in deciding any change in the tax, Levin said on Jan. 13.
Higher wheat prices resulting from the weak ruble may hurt Russian livestock breeders faced with sagging purchasing power by consumers as the economy shrinks, Vladimir Petrichenko, director general of Moscow-based researcher ProZerno, said by phone.
Raising the export tax would mean “sacrificing grain growing so another industry has a better life,” Petrichenko said. “It’s a flawed tactic.”
Wheat prices in Chicago, the global benchmark, have climbed 3 percent this year on signs U.S. demand will improve. Prices yesterday closed at a five-week high.