ODA Market Alert: How would a new Russian floating export tax work?
To protect their domestic prices, Russian 🇷🇺 officials believe they have found a solution to elevated world prices by implementing export taxes. When the Government recently lifted their wheat export tax to €50/t, from March-Jul onwards, they also touted the idea of a ‘floating’ tax on NEW CROP exports, from Jul21 onwards. How would it work? Firstly, The government would set a threshold export price in rubles. Secondly, contract prices (in US$) would be converted into rubles. Thirdly, everything above the threshold price would be taxed at 50%. There is no doubt that this will dis-incentivise Russian farmers to store their old crop wheat stocks into new crop, which could be considered as a bearish medium-term element. However, markets await more detail and still feel they wish to move higher. For now.