Many Western companies are withdrawing their activities in Russia because of sanctions or public pressure. The four major agricultural commodities trading companies: Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus — otherwise known as the ABCDs that dominate the international grain trade — are lagging behind and taking a more nuanced stance.
The Russian attack on Ukraine has been condemned almost everywhere in the world and many companies have drawn the consequences. For example, hundreds of companies have closed Russian branches or no longer sell products on the Russian market. Coca-Cola, Shell, Ikea, Samsung, John Deere, Lely and McDonald's, among others, are stopping their activities in the country. However, it is difficult for the grain trade to immediately cut all ties with Russia. The sanctions therefore include exceptions for the export of foodstuffs to the ABCD companies
Trade at a low level
Louis Dreyfus was the first to announce on March 4 that he was suspending activities in Russia. The company did not reveal further details, but Louis Dreyfus exports between 1,5 million and 3 million tons of grain from Russia every year. Bunge announced on Thursday, March 10, that it will not accept new export orders for Russian grain. The processing location for oilseeds will remain in operation, but will produce for the local market.
Archer Daniels Midland (ADM) announced on Friday, March 11, that the company has a relatively small interest in Russia, but will scale down its activities. Cargill also announced in a statement on Friday, March 11, that it is scaling down activities and not making investments in Russia. The company's essential food and feed activities in the country will remain active. “Food is a basic human right and should never be used as a weapon,” the company wrote. “The region plays a major role in the world food system and is a vital supplier of ingredients for basic products such as bread, infant formula and breakfast cereals.”
Some analysts expect grain exports from Russia to continue in some form. Countries such as Egypt, Turkey, Syria and Iraq are to a greater or lesser extent dependent on grain from the Black Sea region. That question does not disappear because of the war. “These buyers will find ways and means to obtain grain,” according to an anonymous market player at S&P Global. Cargill's statement is largely in line with this view of the grain market.