Decisions made by the world’s largest exporter of wheat could have immediate and beneficial ramifications for Australian grain, according to the latest Agri Commodity Report by ANZ.
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Australia could benefit from self-imposed taxes on wheat from Russia, the largest exporter of the grain in the world
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Earlier this month, it was announced that Russia will further increase taxes on wheat exports from March until June of A$80 per tonne – a decision by Moscow in view of restructuring its wheat industry and reduce its domestic wheat prices.
ANZ Food, Beverage and Agri Research representative Michael Whitehead says Australia’s focus could now shift as it sees an increased presence in the global wheat market.
“The move by Russia, the world’s largest wheat exporter, to impose export taxes on its wheat will bring a renewed focus to Australian wheat,” Whitehead says.
“Russia has made this move in a bid to reduce the country’s domestic wheat prices, and, in turn, increase the amount of wheat available in the country, both for food and feed.”
The decision will see Russian wheat export prices become more expensive and will mean importers around the world will seek supply chains from new sources, with countries competing with one another to purchase grain.
And after Australia’s second-largest winter harvest ever, farmers down under could benefit from the change.
Boosted by a strong rise in area planted – a 27 per cent increase from a year ago – and favourable weather conditions which included a prolonged harvesting period, Australia is on track to post its second highest yield of wheat crop on record.
As it stands, the forecast suggests 31.2 million tonnes of wheat will be harvested, more than double that of the drought-affected 2019-2020 season, placing Australia in a good position to capitalise on Russia’s imposed tax.
The ANZ report outlines how Australia can benefit because of the decisions out of Moscow, with buyers around the globe likely to look toward Australia given its reputation for producing high quality wheat at a reasonable price.
But it’s not just Russia’s recent economic decisions which could see Australia benefit on the global stage with China also bearing influence on our grain industries.
China’s decision to import major quantities of corn from the Unites States – a choice made following poor harvest recently and a need to feed their rebuilding pig population – will cause a ripple affect across the global grain market.
With China replenishing stockpiles to ensure their own feed security, more emphasis could be placed on Australia for wheat exports, even from China, as farmers look to obtain variety for their feed mix.
However, with increased demand on Australian wheat likely on the near horizon, ramification could be felt here with higher wheat prices possible while major wheat users, such as feedlots, could also see their economic margins alter.
Should Russia continue its export tax – it has been announced that a floating tax will be implemented in June – it could lead to market pressures on Australian wheat into 2022.