Russia’s recent measures to limit grain exports are generating significant confusion in international markets, as unclear government directives leave loopholes and create potential tensions with key buyers. Here are the main points:
Purpose of Export Curbs: As the world’s largest wheat exporter, Russia is attempting to restrict grain supplies to prevent domestic price spikes amid rising inflation, partly driven by military expenditures under President Vladimir Putin.
Lack of Official Communication: Following a meeting with grain exporters earlier this month, the Russian government has not issued any official statements regarding export restrictions. The only communication comes from the Grain Exporters and Producers Union (Rusgrain), which claims to represent firms responsible for up to 80% of Russian grain exports.
New Selling Rules: Rusgrain announced that only Russian grain companies can sell directly to sovereign buyers, effectively excluding international dealers unless they have long-term agreements with Russian firms. This change has not been officially endorsed by the government, leading to uncertainty about its implementation.
Market Confusion: Traders report that the lack of clear regulations from the authorities has led to significant confusion in the market. One European trader noted that the numerous semi-official announcements without detailed guidance have complicated the situation.
Impact on International Traders: The new rules could prevent major international traders from offering Russian wheat, although the specific firms affected are not publicly disclosed. The agriculture ministry did not respond to requests for clarification.
Response to Tender by Bangladesh: The confusion became apparent on October 22, when Bangladesh held its first international tender for Russian wheat since the announcement of export restrictions. Notably, two international dealers, Agrocorp and SMC Food DMCC, participated, but were later warned by Rusgrain that they were not on the list of approved foreign dealers.
Urgency of Compliance: The swift communication from Rusgrain regarding the Bangladesh tender indicates Russia’s intent to enforce the new system rapidly, despite the absence of official regulations.
Increased Export Taxes: In addition to the export restrictions, the Russian government has raised export taxes on grain and introduced an unofficial minimum selling price, further complicating the landscape for importers.
Potential Friction with Importers: The new export measures could lead to tensions with importing countries, including political allies like Egypt, which may face increased costs for essential food supplies.