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Putin this week expressed surprise at the sharp rise in prices for everyday foods like bread and sunflower oil and ordered the government to come up with a plan to curb them.
Prime Minister Mikhail Mishustin chimed in Thursday with comments that food producers, exporters and retailers should stop using consumers. Officials are already considering a wheat export tax and an earlier proposal to set a quota for grain shipments for several months next year, an export lobby group said.
“You can’t make money from people,” Mishustin said in a televised comment during a cabinet meeting. – This is completely unacceptable in such a difficult situation. You need to take drastic measures and define precisely how you are going to define pricing. “
He did not elaborate, but Russia has long intervened in the wheat market by imposing restrictions or tariffs. 2007 the country introduced an export tax to combat rising food prices. This decision has raised world wheat prices to record levels. 2010 after a poor harvest, another insurance was issued, reducing stocks and pushing prices up to a two-year high.
It is not yet clear how the wheat export tax will affect shipments. The previous offer for a cereal quota this season was soft enough to allow normal trade to continue. Russia is already interfering in oilseed markets: the prime minister will introduce export taxes on sunflower seeds used to press sunflower oil from January. The draft of the food price rules is scheduled for Monday.
Supply setting
Food inflation in Russia accelerated to 5.8 percent in November. – the largest annual increase since 2019. in the middle. The United Nations global price gauge is currently at its highest point in six years due to high demand for grain in China and tightening supply.
Benchmark wheat futures, where Russia is at the forefront of global exports, have stepped up following Putin’s comments, although the government has yet to announce any sales restrictions. Domestic prices are near record levels, and local bakers and meat producers petitioned the government for an export tax last month.
Since mid-February, the Ministry of Agriculture has proposed a sufficient volume quota to continue the commercial flow without problems. This year’s ruble weakness helped accelerate wheat exports, strengthening competition from Russian suppliers.
“Putin’s comments create a bit of uncertainty,” he said. MattX Ammermann, StoneX Commodity Risk Manager, acknowledged in the letter. – The market is currently sensitive to the potential “what if”.
Russia has had a near-record wheat crop this year and the proposed quota is relatively moderate, so it is not overly concerned about supply, said Carlos Mera, senior analyst at Rabobank International. However, the very fact that Putin and Misustin are talking about this means that the possibility of an intervention cannot be ruled out.
“The situation seems quite calm,” he emphasized. “Right now, everything is speculation.”
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