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Global wheat exporter Russia has suggested it will impose another export quota on to the second half (Jan-Jun) of the 2020-2021 marketing year.
Although the volume has not been announced, this move has potential ramifications for global markets, the AHDB reports.
This is not the first time Russia has intervened in the grain market this year.
In January, Russia proposed a non-tariff export quota of 20 million tonnes (Mt) on the second half of the season. While markets initially rose on expectations of tighter supplies, they fell back due to the realisation that the quota was greater than the amount Russia had available to export.
Furthermore, when global panic buying ensued due to COVID-19, the Russian agricultural ministry limited grain exports to 7Mt from April to June. In response, we saw a rise in Russian export values and global grain prices.
Implications
The AHDB report that the new quota is not set in stone, nor is the volume of grain included in the quota.
However, if significant, we could see frontloading of Russian exports intensify at the start of the season.
This would depress prices but could also offer possible support in the second half of the season if the global grain picture were to tighten.
That said, southern hemisphere production and exports look set to be large in 2020-2021.
Output
Russia are set to produce 77Mt of wheat this harvest, exporting a large proportion of that. In the latest WASDE report, the USDA has revised upwards Russian exports from 35Mt to 36Mt for the 2020-2021 marketing year, a year-on-year increase of 7%.
Last year (2018-2019) 70% of Russian exports were done in the first half of the season (Jul-Dec), which pressured prices. With August, September and October averaging over 4.5Mt per month.
According to the latest data, Russia have exported over 28.5Mt for this marketing year (Jul-Mar), out of an anticipated 33.5Mt. If expectations are met, that means over 63% of wheat was exported before January.
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