The Mintec Benchmark Prices (MBP) for Russian wheat rose by 4% to RUB 16,800/MT (USD 228.5/MT) in the two weeks to 27th August 2021. In the second week of August, the US Department of Agriculture (USDA) lowered the estimate for the 2021/22 Russian wheat yield by 12.5 million tonnes, to 72.5 million tonnes from 85 million in July, excluding Crimea. Russia is the world’s largest wheat exporter, accounting for approximately 20% of the world market. Many countries depend on Russian wheat and are hence vulnerable to price and supply fluctuations that occur in the country. As a result, wheat prices on the global market also rose sharply.
Russia’s wheat prices reached exceptionally high levels, leading to fears of food price inflation and possible state interference. In February 2021, Russia started a flat tax on wheat exports, and in June, it switched to floating duties with the aim to stabilise domestic prices. Currently, the duty is around USD 30.5 per tonne. Rising world prices will affect duty size in a month, and potentially it could increase to USD 50-60 range per tonne.
Russian grains are likely to remain in demand on the world market since their prices are not yet the highest among competitors. Mintec estimates that a weaker supply of wheat in the world market will further push grain prices up in the short term.