Wheat buyers just can’t get a clear road.

Sure, with prices will below spring highs, weighed by harvest pressure and economic concerns, the ride for consumers is much more comfortable than it was.

But even as some obstacles provided by the likes Canada’s drought disappear from the rear view mirror, new potholes emerge, such as the slump in exports from war-torn Ukraine and, most lately, the unexpected surge in the rouble, the currency of top wheat exporter Russia.

Rouble trouble

It wasn’t meant to be like that.

Currency traders’ initial reaction to the Russian invasion of Ukraine, and the slew of Western sanctions, was to send the rouble sharply lower. It near-halved to 150 roubles per $1 in the immediate aftermath.

If the war cut off the flow of wheat shipments from Ukraine’s Black Sea ports – effectively capping the country’s grain exports at 2m tonnes per month, compared with up to 7m tonnes in peaceful times, and sending wheat prices soaring – at least the collapse in the rouble offered some compensation.

It meant that importers willing to trade with Putin’s Russia – and let’s face it, taking the moral high ground is a tricky path to negotiate when there are mouths to feed, or homes to heat – had some power to negotiate a deal.

Big potential

But even that silver lining for importers has tarnished.

The rouble didn’t stay floored for long, recovering to a seven-year high of 50 per $1 as currency controls the Kremlin implemented in response to Western curbs forced its import customers to buy the Russian currency.

This when Russia is poised for a bumper harvest, estimated at 81m tonnes by the US Department of Agriculture – sufficient to support 40m tonnes of exports, equivalent to 20% of the world total.

In fact, the harvest, and export potential, may be even higher, with analysts polled by Reuters pegging output at 86.4m tonnes.

Tax reform?

Against this backdrop, it is not surprising that Russia is considering easing the tax burden on its exports. That may go some way to polishing the potential for Russian shipments, although with few details revealed, it is difficult to judge by how much.

But given the country’s financial hardships, it is unlikely to loosen the levy too much.

While Russia may well achieve strong export volumes next season, as it is managing in this one, they will come at prices well above those that would have been expected at historical rouble exchange rates.

Or, in other words, Russia – the key price-maker for wheat markets, especially early in the season – looks like limiting the price downside for sellers og the grain worldwide.