Russia now more likely to pull the plug on major grain exports

While Russia’s influence in the outcome of the last US presidential election might still be up for debate, there is no questioning the country’s recent impact on the global grain market.

And while most of the recent big international transactions on wheat – including 350,000 tonnes sold to Egypt – have been knocked down to Russian sellers, traders remain uncertain over production levels in the country.

Wheat futures markets moved swiftly upwards mid-week on the revelation that a leading Moscow-based agricultural consultancy had forecast production to be lower than had earlier been estimated, down from 70.8 million tonnes to 69.6 million tonnes – prompting expectations the Russian state would move to curb exports to ensure domestic demand was fulfilled.

Speculation of such a curb was further fuelled by the news that Russia’s agriculture ministry was set to meet grain exporters – who have been trading grain at a pace which has appeared unsustainable to many traders – at the beginning of next week to discuss the situation.

David Sheppard, managingdirectorwithgraintrader Gleadell, said it looked more like “when” rather than “if” the Russians pull the export plug: “The current pace would suggest early in 2019, but with legislation to be approved, early October may be when that becomes official.”

He said that it appeared the earlier official estimates of 35 million tonnes of Russian wheat exports projected by that country’s ministry were “greatly optimistic”.