The countdown is on for the grain trading giants. As of July 1, these international players will cut themselves off from one of their jobs, which was to buy grain from Russian farms, transport it to the territory and store it in silos before shipping.
A situation that has become untenable
But leaving the territory does not mean no longer buying Russian wheat. Cargill has already officially announced its intention to continue its “second” business, that is to say its activity of maritime transport of cereals from Russian ports. Other operators should also continue to buy and sell Russian wheat. « They can hardly do without this origin if they want to continue to supply their new customers in Saudi Arabia or Egypt.», explains Damien Vercambre of Intercourtage.
Despite everything, it is a page that turns for traders who have sometimes been established in the country for a long time, but whose work in Russia has been complicated for several years.
The authorities notably implemented an export tax and export quotas, while at the same time Russian operators began to take over the grain export sector: this is particularly the case of VTB , the Kremlin bank, which has stakes in rail transport and port silos.
Flows that will not be disrupted
In recent weeks, the feverishness has increased a notch with the fear of seeing Russia establish a floor price to maintain prices, hence this decision finally perhaps to record a withdrawal from Russia. «It certainly took a lot of pressure for a group like Viterra, which has invested a lot on the spot, to withdraw.», assures one of our interlocutors.
The announcements by Cargill, Viterra, and Louis Dreyfus only mean that there will be less Russian wheat on the world market for the next season, especially since the last harvest is historic and will leave huge stocks in the country.
But the resumption of control of the cereal export sector by Russia could mean less flexibility on the markets and more tense price negotiations.