russia Cannot Export the New Harvest

russia cannot keep up with exports of the new grain harvest. From August 1–20, exports decreased 2.5-fold, to 1.4 million tons, while wheat exports fell 2.6 times. In September, exports could fall by another 52.1–62.5%, to 1.8–2.3 million tons – the lowest level since 2010.

The grain surplus is crashing the domestic market. Over the past week, prices for wheat, barley, sunflower seeds, and soybeans have fallen by 3.3–8.5%, and over the past year – by more than 40%. rostov region, which accounts for nearly 10% of russia’s harvest, declared a state of emergency on August 28 due to the inability to export grain normally.

In response, the kremlin is preparing government purchases, preferential loans, subsidies, and loans secured by unsold crops. The government is also considering the elimination of export duties and compensation for the high cost of transportation to alternative ports.

This will not resolve the problem. Up to 70% of russian grain exports passed through southern ports, while alternative routes lack sufficient capacity. Transportation to the Baltic Sea adds $30–50 per ton, making exports even less profitable.

At “rusagro”, one of russia’s largest agricultural holdings, net profit for the first half of the year has already plummeted by 99% – from 4.8 billion to 55.88 million rubles.

The government is effectively paying to keep grain in storage. Preferential loans will not create demand, subsidies will not increase port capacity, cheap money will not replace the broken logistics system. If exports do not resume, inventories will be growing, prices will be falling, and the losses will be shifted onto the budget and banks of the rf.