This is bullish for wheat prices, a commodity strategist said
By Diego Flammini
Two grain handlers are leaving the Russian export market.
Cargill and Viterra have announced or will announce their reasons to stop exporting Russian grain.
In Cargill’s case, it will halt its Russian grain exports later this year.
“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,” a spokesperson said, Bloomberg reported. “Cargill intends to continue shipping grain from Russia to destination markets in line with our purpose to nourish the world.”
RBC, a Russian media group, reported that Cargill sent a letter on March 28 to Oksana Lut, Russia’s deputy minister of agriculture, to inform her of the company’s plans.
Cargill is the sixth-largest shipper of Russian grain and is expected to ship about 2.2mmt, or about 4.4 percent of all Russian grain.
The company’s decision to reduce business in the country may not affect overall export volumes from Russia, said Eduard Zernin, chairman of the Russian Union of Grain Exporters.
“Given the planned harvest decline next season, the departure of one of the players will even make things easier for the remaining ones, allowing some of them not to lose business volume in physical terms”, he said in a statement.
Farms.com found Zernin’s original statement and put it through a translator.
Viterra hasn’t officially announced its exit from the Russian grain export market.
That decision will be coming soon, Bloomberg reported.
With two grain handlers reducing business in Russia, other areas could pick up some of that volume.
Overall, Viterra and Cargill’s decisions benefit wheat prices, said Moe Agostino, chief commodity strategist with Farms.com Risk Management.
“It’s bullish for wheat prices and wheat export programs for other countries as long as the war continues,” he said. “Long term for Russia this is not good.”
Wheat markets started to reflect Cargill and Viterra’s decisions yesterday, but futures settled back in, he added.