In recent months, Russian authorities have held a series of meetings with the country’s largest grain traders in an effort to speed up wheat exports after a weak start to the new season. According to Bloomberg, which cites people familiar with the consultations, there have been at least two rounds of talks, including with Deputy Prime Minister Dmitry Patrushev. One of the incentives under discussion is subsidizing rail transport of grain to ports.
Russia remains one of the world’s leading wheat suppliers, and revenue from commodity and food exports is a key source of budget income. Still, the current agricultural season, which began in July, got off to a worse-than-expected start: combined shipments in the first two months fell by nearly 40% year over year to 6.1 million tons. The consulting firm SovEcon notes that September volumes will likely also remain at historically low levels.
Market participants point to two main headwinds. First, domestic wheat prices currently make it more profitable to sell at home than to ship abroad. Second, an export tax introduced in 2021 continues to weigh on outbound flows of wheat and other grains.
Since July, when the discussions began, Patrushev has sought assurances from traders that they will meet the government’s export targets, according to those familiar with the talks. Earlier in September, the Agriculture Ministry said it plans to ship about 33 million tons of grain to foreign markets in the second half of the year. The ministry and the Russian Union of Grain Exporters did not respond to requests for comment.
Last season’s picture was mixed as well. Russia’s wheat exports fell by roughly 23% from a record to 43 million tons. For the current season, the US Department of Agriculture (USDA) forecasts 45 million tons, but last week the agency trimmed its outlook by another 1 million tons. Back in May, Patrushev publicly acknowledged a “significant” decline in grain exports and said prompt measures were needed to preserve the country’s market share, Interfax reported at the time.
In short, the government’s aim is clear: tilt the balance back toward external sales to restore the pace of outbound flows. To that end, targeted incentives are on the table — from logistics subsidies to traders’ soft commitments to meet plan figures. But as long as the domestic price remains more attractive than the export price and the tax burden is tangible, a sharp turnaround will be hard to achieve. The base case for the coming months is a gentle “nudge” of the market to hit stated goals without triggering price shocks.
This article was prepared based on materials published by Bloomberg. The author does not claim authorship of the original text but presents their interpretation of the content for informational purposes.
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