US agricultural giant Cargill will stop exporting Russian grain after the 2022-23 marketing year ends in July, citing "export-related challenges," but it added that it will not sell any of its assets in the country, the company said March 29.
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The spokesperson also said the company will not sell its stakes in the KSK grain terminal or the port silo in Rostov, on the Azov Sea.
Oksana Lut, deputy head of Russia's Ministry of Agriculture, was notified by the company that it would stop exporting grain from Russia in the next agricultural year 2023-24, Russian media reported March 28. The agriculture ministry declined to comment immediately on the update from Cargill.
In a statement issued earlier March 29, Cargill said, "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 added that it intended to continue shipping Russian grain for third parties to destination markets.
Reduced business operations in Russia
In this marketing year, July 2022-June 2023, Cargill is expected to ship about 2.2 million mt, or about 4% of all Russian grain exports. The sixth-largest shipper of Russian grain, Cargill reduced its business operations and halted new investments in Russia in reaction to the Russia-Ukraine war, operating only critical food and feed facilities. The company owns a 25% stake in the KSK grain terminal, which shipped 5.1 million mt of grains in 2020, including the port silo in Rostov.
A spokesperson from the Russian Union of Grain Exporters declined to comment and referred to the group's tweets on March 29.
"Cargill has made a decision to close one of its business lines but not to leave the Russian market," said Eduard Zernin, chairman of the board of the group.
Zernin added Cargill's decision will not affect the overall export volume from Russia.
"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.
Spotlight shifts to other grain traders
Attention now turns to the other large multinational grain-trading companies in Russia, namely Olam, Viterra, LDC and ADM, traders said.
Viterra plans to exit the Russian market, according to Bloomberg, citing sources. The company said it intends to provide a statement to S&P Global March 30. The other multinationals did not immediately respond to a request for a comment.
On Feb. 8, Viterra was awarded 2.1 million mt in new wheat allocation from the Russian agriculture ministry for Feb. 15-June 30, among other large wheat exporters in the country.
At the time of Russia's invasion in February 2022, Viterra, the agricultural business of Glencore, had the largest asset base in Russia of any multinational, with a 50% stake in the grain terminal at Taman, which it says has a capacity of 3.5 million-4 million mt/year, equivalent to around 10% of Russia's total wheat exports. Viterra also owns a shallow-water terminal in Rostov, which has an annual capacity of 1 million mt and has been closed since the invasion in February 2022. The company also owns a 50% stake in Idel Shipping.
Louis Dreyfus also owns a terminal on the Azov Sea, with an annual export capacity of 1.1 million mt, as well as inland storage facilities with a capacity of 1.1 million mt. The company suspended Russian operations in March 2022.