Wheat Drops Notwithstanding Russia Increasing Export Tax

The agricultural commodity fell, notwithstanding the Russian government announced its intention to increase its export tax on wheat for a second time.

This is important news for the grains market. Russia is one of the leading suppliers of wheat, and US production is projected to tighten in the following months. Can wheat quickly test the $7 record?

March wheat futures dropped $0.0425, or 0.63%, to $6.68 per bushel at 14:18 GMT on Wednesday on the Chicago Board of Trade (CBoT). Wheat prices have been exploding out of the gate, charging higher than 4% in the first few weeks of the calendar year.

Moscow has been pushing the wheat market in new sessions

The Ministry of Agriculture recently said it would support and increase a tax on wheat imports to restrict domestic prices. Nevertheless, market observers warn that this will significantly affect importers and consumers. It will append to food inflation in neighbouring economies that are still spinning from the COVID-19 epidemic.

The economy minister announced that the government would force a wheat export fine of 50 euros per ton as of March 1. Officials had initially been proposed a 25-euro levy valid February 15. There were also talks that Russia would achieve a 45-euro tax.

Commodity markets are doubtful that this will yield any profit for Russian consumers. The first export tax that was formally approved last month disappointed to reduce national prices.

With a significant producer reducing supply in the broader wheat market, this could deduct prices to test $7. The US Department of Agriculture (USDA) recently cut estimates of US corn, wheat, and soybean inventories, tightening stocks globally.

In other agricultural commodities, March soybean futures fell $0.2075, or 1.5%, to $13.65 per bushel. March corn futures dropped $0.0925, or 1.76%, to $5.1675 per pound. March coffee futures settled $0.0105, or 0.83%, to $1.261 a pound