Moscow | Reuters — Russia is likely to extend its wheat export tax for the 2016-17 marketing year, which starts on July 1, because the levy is at a minimum level under current market conditions, traders and analysts said.
The government has also indicated it is unlikely to change the tax ahead of the next season, which should see a large grain crop from Russia for a third straight year amid a global surplus and low wheat prices.
Asked on Thursday whether the government would remove or change the tax from July, Russian Agriculture Minister Alexander Tkachev said: “I would not risk (it now).”
“One should wait for a certain period of time,” he told reporters, adding that “we need a year of stability.” Tkachev declined to answer a direct question on whether the tax would be extended for the next year.
There is no need to revise the duty now, said a spokeswoman for Deputy Prime Minister Arkady Dvorkovich, who is in charge of agriculture.
But this question will be discussed if needed in future, the spokeswoman, Aliya Samigullina, told Reuters.
The duty formula is set at 50 per cent of the customs price minus 6,500 roubles (C$127) per tonne but not less than 10 roubles per tonne. Black Sea prices for Russian wheat with 12.5 per cent protein content are around US$190 (C$238) a tonne.
“I think it will automatically move to the new season,” a trader said.
At the current rouble rate against the dollar and with low global wheat prices, this floating tax is negligible, but it could rise significantly were the rouble to fall and global prices rise.
“With the current currency rate the tax is not affecting (exports), but I do not know what would happen with the rouble/dollar rate in the future,” another trader said. “It would be better without this duty.”
The rouble has been volatile in the last two years due to low oil prices and Western sanctions over Moscow’s role in the Ukraine crisis.
“The market can live with this tax, even if it rises slightly,” Igor Pavensky, deputy head of rail infrastructure operator Rusagrotrans, said.
Russia’s Agriculture Ministry sees the country’s 2016 grain crop at no less than last year’s 104.8 million tonnes, Tkachev said. He did not provide an estimate for 2016-17 grain and wheat exports.
— Reporting for Reuters by Olga Popova and Polina Devitt; writing by Polina Devitt.Tagged export tax, Russia, wheat export, wheat prices