Azernews.Az

By Bloomberg

Russian grain traders are rushing to ship wheat overseas before a tax takes effect next month.

Weekly shipments jumped sixfold to 352,000 metric tons in the period to May 27, data from the Agriculture Ministry showed on Monday. Exports may total 1.6 million tons for May and June, about 14 percent more than previously expected, according to Igor Pavensky, deputy director of marketing at ZAO Rusagrotrans, which transports grain by rail.

“We didn’t expect the tax mechanism would be so stiff,” Pavensky said by phone from Moscow. “Exporters now need to hurry because the levy may increase beyond the minimum level toward autumn, especially for expensive high-quality wheat.”

Russia, which has used levies for most of this year to restrict grain trading, has given traders a tax-free window before applying a new charge that will vary based on prices. The fourth-biggest wheat exporter wants to limit bread prices and protect livestock farmers from rising animal-feed costs. The country banned food from the U.S. and European Union last year in retaliation for sanctions over the Ukrainian conflict.

The pace of exports last week was high because traders held back shipments to avoid a previous tax, which ended May 15, according to Pavensky. Shipments will probably slow from that level in the coming weeks, he said.

The new tax may cut exports next season by as much as 29 percent to 15 million tons, the Russian Grain Union said last week. The levy will be 50 percent of the customs value of wheat, minus 5,500 rubles ($103), according to a decree on Friday. The charge will be fixed at 50 rubles a ton on wheat priced up to 11,100 rubles, and more if prices are higher.

Rusagrotrans previously estimated that Russia would export as much as 600,000 tons of wheat in May and another 800,000 tons this month, Pavensky said.

More Russian wheat on the market is affecting international tenders. On May 28, Egypt’s state-run buyer bought 180,000 tons of Russian wheat for delivery from July 1 to 10, its biggest purchase from the country since February 2014. The average price of the grain, including another 60,000 tons from Romania, was $199.28 a ton, the lowest since the marketing year started July 1.