(Bloomberg) — Russia’s wheat crop could hit a historic 100 million tons, according to consultant SovEcon, as the commodity piles up at home as the nation struggles to export large quantities.
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Farmers across the country are wrapping up a bountiful harvest after good summer growing conditions. The massive supply in the world’s largest shipper would normally help push down global prices. But so far this season, government export taxes and logistical problems from the war in Ukraine have kept more grain than usual at home.
“Storage has been a problem for several months for some farmers,” SovEcon managing director Andrey Sizov said by phone. “We haven’t seen anything like this since 2017-18.”
Russian wheat export prices have recently become more competitive with other sources such as France and the US, meaning supplies could increase. Higher prices and problems transporting Russian cargo – some insurers and banks avoided Russian goods after its invasion of Ukraine in February – slowed exports earlier in the season. Food exports are not subject to sanctions, but some institutions are wary of doing business with Russia as a result of these measures.
Wheat prices rose globally after Russia’s blockade of Ukraine’s ports choked that country’s exports, pushing up food prices. While a deal to reopen ports reached in July has helped ease prices, the escalating war in Ukraine has pushed wheat back to pre-deal levels.
The International Grains Council also raised its estimate for Russia’s wheat crop by almost 6 million tonnes on Thursday, but did not expect that extra supply to leave the country – keeping the export outlook unchanged at 36.5 million tonnes. Consultant IKAR also raised its wheat crop estimate to 99 million to 100 million tonnes, according to Interfax.
“This huge harvest does not fully translate into huge exports,” SovEcon’s Sizov said.
(Updates with IKAR forecast in sixth paragraph)
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