Cleaning of grain traders

International grain traders are reviewing the schemes of work in the Russian Federation. Following Cargill, the fourth grain exporter Viterra can reduce business in the country by transferring the structure and part of the port facilities to management and selling a stake in the Taman terminal. Information about this has already led to an increase in quotations for wheat on world markets.

International grain trader Viterra (formerly Glencore Agriculture) may reduce its presence in Russia, said Bloomberg. This information was confirmed by three sources of “Kommersant” in the market. According to them, Viterra may sell a stake in the Taman terminal, which it owns jointly with Demetra-Holding. A subsidiary of Viterra Rus and a terminal in Rostov-on-Don can be transferred to management, the interlocutor of Kommersant adds. As follows from the Unified State Register of Legal Entities, Nikolay Demyanov, Managing Director of Viterra Rus, established Agribusiness Management LLC in Moscow in May 2022. Mr. Demyanov declined to comment, Viterra did not respond to Kommersant.

Viterra can sell a stake in the Taman terminal to structures associated with Demetra-Holding, two Kommersant sources say. Demetra Holding is 45% controlled by VTB, which fell under US sanctions.

A-Pro partner Ekaterina Makeeva says that if the buyer is associated with persons under sanctions, then difficulties with the transaction may arise at the compliance stage. But Aleksey Sharov, managing partner of Averta Group, clarifies that the company will be considered under sanctions only if VTB owns 50% or more or has indirect control. The deal should not bring economic benefits to VTB, adds Delcredere lawyer Artem Kasumyan. Demetra Holding declined to comment.

The intention of another major trader – Cargill – to stop grain exports from Russia in the 2023/24 season was reported by RBC. According to the newspaper, the company also notified the Ministry of Agriculture of the beginning of the revision of the portfolio of assets related to the export of grain. Changes in other types of activity in the Russian Federation are not planned. Cargill owns a stake in the KSK terminal in Novorossiysk, the main owner of which is Delo Group. The company also has an enterprise for the production of feed ingredients and products from starch and molasses. Cargill did not provide a comment. Delo Group of Companies says that they consider grain transshipment as a strategic line of business and are interested in assets in the segment, but there are no negotiations now.

According to Kommersant, in the current season, from July 2022 to February 2023, Viterra Rus shipped 2.96 million tons of grain, ranking fourth among exporters. Cargill exported 1.35 million tons, which is in sixth place. The entire export of grain from Russia for the period exceeded 34.7 million tons.

According to Kommersant’s sources in the market, the departure of Cargill and Viterra may be associated with “growing pressure.” Back in September 2022, VTB head Andrey Kostin proposed to Russian President Vladimir Putin that companies from unfriendly countries be banned from buying and reselling grain, as well as from owning transshipment and storage facilities. In November, Dmitry Konyaev, General Director of Uralchem, informed Vladimir Putin about his readiness to buy the assets of Viterra and Cargill in the grain trade. Then Viterra and Cargill denied information about plans to stop work.

According to Kommersant’s sources, following Cargill and Viterra, Louis Dreyfus (LDC), the tenth grain exporter from the country this season, may also reduce business in the Russian Federation.

In LDC, “Kommersant” did not answer. The Union of Grain Exporters notes that the grain business has become “overly politicized and risky”, noting discrimination against international traders of Russian grain.

The contract for the supply of wheat in May on the stock exchange in Chicago by the evening of March 29 rose by more than 1.2%, to $259.55 per ton. Prozerno CEO Vladimir Petrichenko says that market turbulence will continue “for some time” as the process of leaving global players will not be instantaneous. The director of Sovecon, Andrey Sizov, notes that the reduction in the number of foreign grain exporters makes it easier for the state to control, and for farmers, the weakening of competition among buyers threatens with an additional price reduction.

The Ministry of Agriculture told Kommersant that they are ready to work with all foreign companies whose activities contribute to the development of the country’s food market and its export potential. In the event that foreign players leave, the vacant niches are promptly occupied by Russian ones, they added. As clarified in the Ministry of Agriculture, information about the termination of Viterra and LDC exports of Russian grain to the ministry has not yet been received.

Anatoly Kostyrev, Natalia Skorlygina