Russia is harvesting a record amount of wheat this year, but its export is not without a struggle. Although Russian grains are not subject to Western sanctions, many companies avoid the country. VTB Bank – one of the largest banks in the country – calls on President Putin to thwart Western grain companies in Russia.
VTB Bank is hit by sanctions from the West and, as a counter-offensive, calls on the Russian president to block Western grain traders in Russia. This is evident from documents from the news agency Reuters managed to get his hands on it. The Kremlin is not commenting on the situation. VTB Bank also refrained from commenting.
15% foreign owned
In the letter, CEO Andrei Kostin of VTB Bank personally asks Vladimir Putin to impose a decree that companies from 'unfriendly states' are no longer allowed to trade Russian grains and oilseeds. The company also states that these companies are not allowed to own shares in port facilities used for storing and shipping agricultural products. According to Kostin, 15% of Russia's grain trade and exports are in foreign hands. This is all located in the Sea of Azov and Black Sea. "Russia is missing revenues due to the activities of these companies," the CEO said in the letter. VTB also has an interest in a number of large Russian grain export terminals.
The major grain trading companies have different foreign policies. For example, Bunge and Cargill have scaled down their activities in Russia since the war, but Louis Dreyfus, Viterra and Glencore are still active there.
Don't thwart companies
Based on the correspondence obtained by Reuters, the news agency believes that Putin is indeed raising the matter with the Kremlin. The emphasis is mainly on strengthening Russian grain companies and not on thwarting Western companies, a source reports. In May this year, Russian Agriculture Minister Dmitry Patrushev announced that the government will continue to support these companies.
Russia needs a well-oiled export engine this season more than ever. The JRC's latest estimate in their Mars bulletin puts 94,99 million tons of wheat harvested this year. That is no less than a quarter more than last year and a fifth more than average. The International Grains Council (IGC) is slightly more conservative with a forecast of 93,4 million tonnes. The USDA is considerably lower at 91 million, but the US Department of Agriculture will undoubtedly correct this figure.
Wheat exports slowed
So far, exports have been relatively slow. According to the Russian market agency IKAR, 4 million tons of wheat were exported in September, a decrease of 700.000 tons compared to last year. The IGC thinks that Russia can export a maximum of 36,5 million tons this year, which is more than 10% more than a season earlier. The USDA even estimates 42 million tons. Western countries do not impose sanctions on Russian grains, but companies involved in shipping, payments and insurance are very cautious in dealing with Russian parties.
Heavy rainfall in southern and central Russia is delaying the sowing of winter grain. According to market agency SovEcon, 8,6 million hectares have now been sown. That is 1,5 million hectares less than a year earlier and the lowest area in nine years.