Russian exporters to supply grain directly to 13 countries, eliminating foreign intermediaries

RUSSIA – Russian grain exporters will now directly supply wheat and other grains to 13 key countries, bypassing foreign intermediaries to maintain price stability and streamline the export process, according to the Russian Grain Union.

This move, reported by Interfax on October 18, follows a pivotal decision on October 11 to ensure Russian grain is not resold at reduced prices by third-party tender winners, a practice that has undercut market value.

Under this new strategy, grain shipments will go directly to government agencies or sovereign buyers in Egypt, Tunisia, Algeria, Morocco, Jordan, Saudi Arabia, Bangladesh, Qatar, Kuwait, South Korea, Pakistan, India, and Iraq, as outlined by Eduard Zernin, CEO of the Russian Grain Union.

The initiative has gained support from the Russian Ministry of Agriculture, which endorsed the approach to consolidate Russian exports and prevent low-priced resales that have affected the grain market in recent months.

The restructured export model aims to discourage grain from being dumped at low prices in international markets, especially since Russian wheat remains the cheapest in the Black Sea region.

This change comes as multinational companies exited the Russian grain sector in July 2023, concentrating exports among a few Russian players who now dominate the market.

As the market adapts to this shift, global traders have expressed concern.

“It will be interesting to see how the market will react and how Russian exporters can supply by themselves all the export surplus,” one Russian wheat buyer commented, highlighting the logistical challenges that might arise.

Russia’s current wheat prices published by the Russian Grain Union on October 15 are set at FOB US$240 per metric ton for October shipments, increasing incrementally to US$250 per metric ton for December.

Despite these official prices, Platts reported a 1.28% rise to US$237 per metric ton for November shipments, the highest price in three months.

The pricing structure includes an unofficial floor at US$250/mt for tenders, a strategy Russia has deployed in the past to stabilize its wheat exports.

In March 2023, a price floor of US$275/mt FOB was unofficially imposed, with evidence of these controls seen in Egypt’s tenders, where Russian wheat shipments adhered to the floor price.

In Egypt, the largest wheat importer globally, the shift may have a noticeable impact. The country’s state buyer, GASC, purchased about 60% of total wheat imports in the 2023-24 marketing year, with imports this season reaching 2.9 million mt by the end of September.

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