Russia’s tacit grain export curbs cause market confusion
31/10/2024 13:07
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Market sees Russia's export curbs as semi-official
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Export lobby acts on behalf of the government, source says
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Export lobby sent letter to traders, urging adherence to
new
rules
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Market confusion most apparent during Bangladesh tender
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By Olga Popova, Michael Hogan and Gleb Bryanski
MOSCOW/HAMBURG, Oct 31 (Reuters) - Russia's measures to
curb grain exports are causing confusion in international
markets as the absence of clear government instructions creates
loopholes and potential friction with key buyers, traders said.
Russia, the world’s largest wheat exporter, has attempted to
limit grain supplies to global markets to prevent a price spike
at home, as President Vladimir Putin seeks to combat inflation
partly fuelled by military spending.
The government has not commented officially after meeting
with grain exporters earlier this month to discuss export
restrictions.
The only statement so far has come from Russia’s Grain
Exporters and Producers Union, or Rusgrain, which claims to
represent firms exporting up to 80% of Russian grain.
The union stated that from now on, only Russian grain
companies will be able to sell directly to sovereign buyers. The
new rules exclude international dealers unless they have
long-term off-take agreements with Russian companies.
A source in the Russian government told Reuters that it
was fully aware of Rusgrain's actions and that the union was
relaying the official message.
"They are an association with which the ministry of
agriculture has an agreement. They inform the market but do not
regulate it. That is, they convey certain decisions made to the
market participants," the source said.
This measure would exclude some major international traders
from offering Russian wheat although it is not publicly known
who can no longer do so as the list of approved foreign firms
with off-take agreements has never been made public.
The government has not officially backed the union's
announcements and actions so far and the agriculture ministry
did not immediately respond to a Reuters request for comment.
“The market has been confused by the many semi-official
announcements about export restrictions from Russia, without
detailed regulations being published by the authorities,” one
European trader said.
The Union's head Eduard Zernin told Reuters that Russian
grain exporters were private companies that "conduct their
business in accordance with legal requirements and established
business practices".
"We do not plan to disclose any information regarding our
business practices, considering ongoing attempts to hinder the
supply of Russian grain to countries in need," Zernin added,
referring to Western sanctions over Russia's military action in
Ukraine that complicate cross-border payments with Russia and
hinder Russian companies' access to international markets.
POTENTIAL FRICTION
The confusion about the grain export curbs became evident on
Oct. 22 when Bangladesh, an emerging major buyer of Russian
wheat, held its first international tender since the
restrictions were announced.
At the tender, two international dealers, Agrocorp and SMC
Food DMCC, were among three participants. They offered grain on
an optional origin basis that could have included Russian wheat.
Some 24 hours after the tender, Russia’s Grain Exporters
Union sent a letter to Russian traders urging them to adhere to
the new rules.
In its message, the union stated that two out of three
companies in the Bangladesh tender were not on its list of
foreign dealers with off-take agreements with Russian companies.
"Our list of offtakers does not include Agrocorp and SMC
Food DMCC," said traders citing the letter.
Reuters could not obtain the letter.
The Union confirmed to Reuters that the letter has been sent
and that it mentioned Agrocorp and SMC Food DMCC.
“The fact that this warning about the Bangladesh tender
was sent out so quickly and specifically seems to show Russia is
serious about imposing the new system quickly despite the lack
of official regulations,” another international trader said.
Besides export restrictions, the Russian government has
already officially increased export taxes on grain and
introduced an unofficial minimum selling export price, according
to Reuters sources.
New export restrictions could cause frictions with
importers, including political allies like Egypt, which would
face higher bills for food imports, traders said.
"The Arab and African buyers have to pay more for their
critical food wheat imports (when shipments are restricted)," a
German trader said.
(Additional reporting by Ruma Paul in Dhaka, Editing by Nigel
Hunt and Susan Fenton)
((gleb.bryanski@thomsonreuters.com;))