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Russia's 2022/23 Wheat Exports Expected To Hit Record High

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Russia's 2022/23 (July-June) wheat exports are forecast at 42.6 million tonnes, 300,000 tonnes above the previous forecast and also a record.

The increase in exports is due to large production volumes. Last week SovEcon projected a record 89.2 million tonnes of Russian wheat production, 0.6 million tonnes above the May forecast.

However, Western sanctions and high tariffs constitute the main factors unfavorable to exports. Shipowners remain cautious about sending ships to the Black Sea region due to Western sanctions on Russia; payments for Russian grain have also been complicated.

The ruble exchange rate and high tariffs are also detrimental to Russian wheat exports. At present, the Russian Ministry of Agriculture has set the export tax on wheat from June 29 to July 5 at $146.1 per ton, much higher than the less than $100 per ton at the end of last year, which is also a record tariff level.

The Russian ruble is at a seven-year high, also making Russian goods less competitive. But Russia's economy ministry said on Tuesday it would change the formula for calculating export taxes on grain and sunflower oil to support exports amid a stronger ruble. SovEcon said that if a change in the formula for calculating export duties results in a drop in export taxes, it would provide a huge boost to Russian exports.

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