Early this week, world wheat futures markets continued to be pressured by speculative long holder selling. Losses extending from the contract highs reached last week have resulted in futures markets losing almost all the price gains they had made since the start of January. Losses for London wheat futures were almost £15/t. However, further political intervention that will disrupt grain flows partnered with soaring Chinese import demand helped generate a rally from the lows. This highlighted how market price volatility may be expected to continue.

The Russian government formally approved its proposed €50/t wheat export tax which will come into effect from 1st March and run to 30th June 2021. It remains unclear what the exact impact of these taxes will be, but restricting grain flows from the world’s leading wheat exporter can only support prices in the short-term. Russian officials have confirmed they will continue taxing wheat exports from 1st July but, instead of the fixed rate, a formula will be used to calculate exact amounts. Meanwhile, disruptive weather is preventing 70 vessels from loading at the port of Azov, resulting in 20km queues of lorries waiting to tip.

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