Cargill's Step Back from Russian Market
Cargill Inc announced on Wednesday that it would no longer handle grain from Russia, the top wheat supplier, at its export terminal starting in July. However, the company's shipping unit will still transport grain from the country's ports.
Global Grain Supply Concerns and Wheat Futures Prices
This decision has raised concerns over global grain supplies, which the ongoing 13-month war in the Black Sea breadbasket region has disrupted. Consequently, benchmark wheat futures prices have reached multi-week highs.
International Grain Traders Limiting Russian Investments
Since Moscow invaded Ukraine, most international grain traders have ceased new investments in Russia but continue to export Russian wheat.
Cargill's Plans for Russian Grain Exports
Cargill stated that it would stop elevating Russian grain for export in July 2023, after the completion of the 2022-2023 season. The company owns a stake in the grain terminal at the Black Sea port of Novorossiisk but has not specified if it plans to sell the stake.
Wheat Futures Prices React to News
Wheat futures prices increased in response to Cargill's announcement, with the Chicago Board of Trade May wheat futures reaching a one-month peak and Euronext May milling wheat hitting a two-week high.
Speculative Funds Doubt Russian State Exporters
Despite claims that Russian state exporters can maintain grain export levels, major speculative funds holding large short positions are currently doubtful, according to Arlan Suderman, chief commodities economist with StoneX.
Russian Agriculture Ministry on Cargill's Decision
The Russian agriculture ministry has confirmed that Cargill's cessation of grain export activities will not impact the volume of domestic grain shipments abroad, and the company's grain export assets will continue operating.
Viterra's Plans for Russian Grain Trading
According to Bloomberg News, grain trader Viterra, part-owned by Switzerland-based Glencore, is reportedly planning to halt grain trading in Russia. A spokesperson for Viterra declined to comment but said a statement would be issued later.
Cargill and Viterra's Role in Russian Wheat Exports
Cargill and Viterra are among the largest exporters of Russian wheat. RBC business daily reports that Cargill will export 2.2 million tonnes of Russian grain in the 2022-23 exporting season, accounting for approximately 4% of Russia's total grain exports.