The Mintec Benchmark Prices (MBPs) for Russian wheat rose by 23.3% to RUB 17,400/MT (USD 241.9/MT) from mid-July to 8th October 2021. The current prices are at record levels, supported by estimation of declining output in 2021/22 due to adverse weather conditions in the Urals and Volga and high wheat export duty, as well as the strengthening of the Russian ruble. In February 2021, Russia introduced a flat tax on wheat exports (fixed rate of USD 58.8/MT) and in June, it switched to floating duties with the aim to stabilise rising domestic prices. The tax is applied when the export price of wheat exceeds USD 200/MT, and is implemented as 70% of the difference between the market price and the benchmark. Russia is the world’s largest wheat exporter, and many countries depend on Russian wheat. Thus, prices across the globe are vulnerable to price and supply fluctuations that occur in Russia.
Higher prices and a limited supply of Russian wheat caused some importers to look for alternative sources. As a result, demand for wheat from Ukraine, one of the largest wheat suppliers, increased on the international market. According to the USDA report, Ukrainian wheat exports in 2021/22 are estimated to increase by 40% to 23,500 million tonnes on the back of record-high production and strong global demand. Consequently, any additional increase in Russian export tax could lead to further cuts in Russian exports, limiting global availability thus, supporting wheat prices.