Miller Magazine Issue: 145 January 2022

74 INTERVIEW MILLER / january 2022 Supply pressure on wheat continues due to increasing global demand and decreasing stocks. Wheat price has reached its highest level since the 2012/13 season. And the increase in prices has raised food security concerns in many countries as wheat is a staple food. Wheat prices directly affect the cost of many products such as bread and pasta, which directly affect inflation. As the world’s largest exporter of wheat, the policies to be implemented by Russia are closely followed by the global wheat markets. Miller Magazine has engaged in an exclusive interview with Mr. Dmitry Rylko, the Director-Gen- eral of the Institute for Agricultural Market Studies (IKAR), to discuss the Russian wheat production and export outlook, the effects of the variable export taxes and trade quota on the prices. Since June 2021, Russia has introduced a floating duty on the export of wheat, corn and barley. Moscow is now considering imposing higher export tariffs if wheat prices reach 375$ per ton, with a bigger hike proposed if prices reach 400$ per ton. Russia also plans to set its wheat ex- port quota at 8 million tonnes for Feb. 15-June 30. Rylko has a positive wheat production forecast for the next season. “Our provisional wheat production forecast is 82-83 mmt”, he says. He defines the impacts of the float- ing duty as ‘Russian wheat price super-cycle. “As the result, our market shares on two key export markets - Egypt and Turkey - drop quite significantly”. At the same time, Russia significantly increased its sales to Saudi Arabia and Algeria, he underlines. Speaking to Miller Magazine Mr. Rylko assesses recent developments in the wheat markets: How the floating export duty did affect the pace of the Russian wheat exports? In which export markets has Russia experienced a decline this year? Is there any change in the Top-10 Russian wheat importers list? Floating tax tends to hamper Russian wheat export flow, but not decisively...I would call what really happens as, "2021 Russian wheat price super-cycle": After deduction duty FOB export price looks as insufficient for motivation of domestic farmers to sell, and importers have to raise a purchase price - Russian exporters raise CPT export termi- nal prices and farmers start releasing wheat - in reflection of export price rise, export duty is rising - exporters have to lower CPT export terminals prices - farmers stop selling - exporters diminish export contracting rate - importers have to elevate purchase prices - and so on... We have seen 6-7 such full cycles during July - December. During this time, Russian FOB Black Sea IKAR price index has raised by re- cord $105 per ton. Of course, it happened not only due to “Floating tax tends to hamper Russian wheat export flow, but not decisively...I would call what really happens as, ‘2021 Russian wheat price super-cycle’… In foreseeble future Russia will keep the floating tax system as a key to against the domestic grain inflation, if we like it or not.” ‘Russian wheat price super-cycle’ Dmitry Rylko Director General Institute for Agricultural Market Studies (IKAR) Interview: Namık Kemal Parlak