The huge Russian wheat crop of 100 million tons is piling up at home

(Bloomberg) — Russia’s wheat crop could reach 100 million tons, according to consultant Will Eikon, with the commodity accumulating at home as the nation struggles to export large quantities.

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Farmers all over the country end up with a bumper harvest after good planting conditions throughout the summer. A huge supply at the world’s largest shipping company will usually help bring down global prices. But so far this season, government export taxes and logistical issues from its war in Ukraine are keeping more grain than usual at home.

“Storage has been an issue for some farmers for a few months,” SovEcon Managing Director Andrey Sizov said by phone. “We haven’t seen anything like this since 2017-18.”

Russian wheat export prices have recently become more competitive compared to other sources such as France and the United States, which means shipments could increase. Rising prices and issues with shipping Russian goods – some insurers and banks shunned Russian goods after the invasion of Ukraine in February – slowed exports earlier in the season. The sanctions do not target food exports, but some institutions are afraid to do business with Russia as a result of those measures.

Wheat prices soared globally after Russia’s blockade of Ukraine’s ports choked that country’s exports, driving up food prices. While a deal to reopen ports reached in July helped ease prices, the escalation of the war in Ukraine has brought wheat back to pre-deal levels.

The International Grains Council also raised its estimate of Russia’s wheat crop by 6 million tons on Thursday, but it does not expect this additional supply to leave the country – keeping export forecasts unchanged at 36.5 million tons. The consultancy firm IKAR also raised its wheat harvest estimate to 99 million to 100 million tons, according to Interfax.

“This huge crop does not turn entirely into huge exports,” said Sizov of Sov Eikon.

(Updates with IKAR forecast in sixth paragraph)

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