Russia, our biggest wheat supplier, is mulling a grain tax
Egypt’s largest wheat supplier is planning to impose a temporary tax and maximum quota on grain exports in a bid to boost local supply and stabilize prices, sources close to Russian government discussions told Reuters. The tax could be between USD 27-30 per tonne of wheat, and it could be applied alongside a quota on exports of wheat, rye, barley and maize. The quota could be set at 17.5 mn tonnes for all grains, a source suggests to the newswire.
Egypt has made record purchases of Russian wheat since the start of the pandemic to ensure its strategic stockpile and curb any possible wheat shortages. Russian wheat constituted 80% of Egypt’s wheat purchases last season, with 2.5 mn tonnes bought as of August and more expected to come.
The tax might not necessarily translate into a considerably higher final price per tonne, which will limit its impact on Egypt, Pharos Holding’s head of research Radwa El Swaify told Enterprise yesterday. If anything, the increase might prompt the Finance Ministry to take out hedging contracts and guard against rising grain prices, El Swaify added.
The government is mulling purchasing derivative contracts to protect against rising grain prices, alongside hedging against rising oil prices, Finance Minister Mohamed Maait recently said. This option had been floated several times in recent years due to Egypt’s heavy dependence on wheat imports. Wheat futures are currently trading at USD 210.7 per metric ton, slightly above the USD 199.5 price assumed in the state budget.