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Cargill said on Wednesday, March 29, it would take a further step back from the Russian market by no longer handling the top wheat supplier’s grain at its export terminal from July, although its shipping unit will continue to carry grain from the country’s ports.
The move stoked concerns about global grain supplies disrupted by the 13-month-old war in the Black Sea breadbasket region, lifting benchmark wheat futures prices to multi-week highs.
Most international grain traders have stopped new investment in Russia since last year following Moscow’s invasion of Ukraine but continued exporting Russian wheat.
“As grain export-related challenges continue to mount, Cargill will stop elevating Russian grain for export in July 2023 after the completion of the 2022-2023 season,” the company said in an emailed statement.
“Elevating” refers to the lifting of grain into export vessels.
Cargill, which owns a stake in the grain terminal in the Black Sea port of Novorossiisk, did not specify if it was selling the stake.
Benchmark Chicago Board of Trade May wheat futures rallied to a one-month peak on Wednesday and closed at $7.04-3/4 a bushel as the news sparked nervousness about grain flows from top wheat exporter Russia. Paris-based Euronext May milling wheat hit a two-week high and settled at 265.25 euros ($287.13) a metric ton.
“Russian state exporters claim that they’ll be able to keep grain moving out at the same pace, but major speculative funds holding large short positions lack confidence in that currently,” Arlan Suderman, chief commodities economist with StoneX, said in a market note.
The Russian agriculture ministry had said earlier that Cargill informed it that it would stop its grain export activities from the start of the next season.
“The cessation of its export activities on the Russian market will not affect the volume of domestic grain shipments abroad. The company’s grain export assets will continue to operate regardless of who manages them,” the agriculture ministry told Reuters.
In addition, grain trader Viterra, part-owned by Switzerland-based mining and trading giant Glencore, is planning to stop grain trading in Russia, Bloomberg News reported, citing sources familiar with the matter.
A spokesperson for Viterra declined to comment but said a statement would be issued at a later stage.
Viterra and Cargill are among the largest exporters of Russian wheat.
According to RBC business daily, Cargill will export 2.2 million metric tons of Russian grain in the 2022-2023 exporting season, or around 4% of Russia’s total grain exports. – Rappler.com
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