Futures slide as Russia shelves further export tax increase
Wheat futures in Chicago declined for a second day as Russia said it had no plans to raise export duties further and on speculation that record high prices will encourage increased planting of the grain globally.
Ministers see "no need so far" for a second duty increase, Economy Minister Elvira Nabiullina told a conference in Moscow. Russia approved a tax on wheat exports of 10 percent of declared value, or at least 22 euros per metric ton, on October 12 to curb rising food prices. The tax will take effect on November 12.
"This news will put further pressure on wheat," said Toshimitsu Kawanabe, an analyst at futures broker Taiheiyo Bussan in Tokyo. "We may see farmers plant more because of higher prices. And it's obvious that some exporters, such as Russia, have increased sales."
Wheat for December delivery lost as much as 13 cents, or 1.6 percent, to $8.28 a bushel in after-hours electronic trading on the Chicago Board of Trade, and stood at $8.30 at 4:28 pm in Singapore. The contract fell the CBOT's daily limit of 30 cents yesterday. The 3.4 percent drop was the biggest since June 29.
Most-active futures are down 14 percent since reaching a record $9.6175 on September 28. Still, the price is up 59 percent in the past year following weather damage to crops in Europe, Canada, Australia and Ukraine.
Russia's exports in September may have jumped 58 percent to as much as 2.2 million tons from a year earlier, according to preliminary customs data, Sergei Shakhovets, head of information and analytics at the Russian Grain Union, said on October 9.
Customs will release official September figures next month. Sales by Russia, the world's third-largest wheat exporter, rose 37 percent in August, according to the customs data.
US sales of the grain also jumped. As of October 11, advance export sales in the year that began June 1 were more than double the same period a year earlier, the Department of Agriculture said last week.
Bloomberg News
(China Daily 10/25/2007 page16)
