Despite Higher Transport Costs, Weak Ruble Keeps Russian Grain Competitive

Although tighter regulations on truck weights have caused grain transportation costs to increase over the past two weeks in Russia, the country’s grain exports are expected to remain globally competitive thanks to a weaker ruble.

Higher fines being imposed for excess truck weights have led to exporters to have to use additional trucks. This latest measure is adding pressure to the country’s domestic grain industry which is dealing with a weakening currency and a wheat import tax imposed on July 1.

"Costs have risen as suppliers have to use 25-30 percent more trucks than previously," said Dmitry Rylko, the head of the IKAR agriculture consultancy, as the total ruble-denominated costs for some traders in the country have doubled compared to the previous season. However, the ruble continues to fall - losing 5% against the dollar since the beginning of August, supporting export demand and keeping domestic grain prices up.

Russia’s grain exports are estimated to be 30 million tons for the 2015/16 marketing year, which started on July 1.