Russia’s Battle Against Inflation Erodes Its Wheat Dominance

(Bloomberg) -- Russia’s worsening crop prospects and President Vladimir Putin’s bid to keep a lid on inflation are derailing exports to one of the country’s most important wheat markets. 

The nation’s wheat has become less competitive as the government introduced export taxes after Putin bemoaned surging local food costs, while poor weather has hurt crops. That’s seen Russian supplies account for just a fifth of tender purchases by top importer Egypt this season, the lowest level in at least seven years, data compiled by Bloomberg show.

Russia has traditionally dominated sales to Egypt thanks to bumper harvests of cheap grain, and losing market share this season has been good news for rival Black Sea suppliers like Romania. Still, the smaller overseas sales have so far offered little respite for local Russian prices, with domestic wheat costs at the highest for this time of year in at least a decade.

Global wheat prices jumped after the U.S. last week shocked markets with a huge cut to Russia’s crop estimate, while there have been worsening production outlooks and quality issues in other major growers. Egypt’s total purchases are running well below last season on the back of higher prices.

Read more: Russia’s Title as the World’s Biggest Wheat Exporter Is at Risk

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