‘Their crops are so good they open new markets year after year’

Russia is strengthening its leading position in grain trade and eyeing new markets

‘Their crops are so good they open new markets year after year’
Photo: pikist.com

Abundant harvests and reasonable investment helped Russia to turn from net importer of wheat into the world’s top exporter. It may soon increase supplies to Algeria, which is one of the largest buyers of grain, thanks to new smoother rules adopted by the African state.

Russia looks set to cement its place as the dominant force in the wheat world, considers Bloomberg adding that cheap supplies have helped the country grab export-market share from the US to EU in the past decade. While 20 years ago, Russia was reliant on wheat imports, now it accounts for a fifth of the global market selling grain to more than 100 countries and constantly increasing volumes.

“You can see the staggering increase in both production and exports from Russia,” commented Managing Director of CRM AgriCommodities James Bolesworth. “Russia has invested heavily in order to increase market share, and it’s still growing.” The country is seeking to extend the list of its partners by entering markets that didn’t accept its wheat before. This year, it has started supplies to Saudi Arabia, as the kingdom relaxed its rules on the level of bug damage in cargoes. On 18 September, Algeria’s state grains agency also announced relaxing bug-damage rules. From its next tender, the world’s third-biggest buyer will start accepting offers from all countries including Russia.

Although Russia’s agriculture officials haven’t confirmed any changes yet, shippers have been already invited to Algerian tenders. Earlier this year, a trial shipment from Russia passed Algerian quality tests. Currently, Algeria is the largest customer of French wheat, so an increase in Russian supplies may seriously undermine France’s position, as the country’s exports outside the EU are already expected to halve this season.

Grain elevator in Krasnoyarsk Krai, Russia. Photo: GEFEST

Low prices have helped Russia grab significant market share from other market players in the past decade. In Egypt, Russian suppliers have won about 80% of tenders so far this season. To increase their crops, Russian farmers invested rising incomes in fertilisers and top-of-the-line equipment to further boost output as well as expanded storage to have an opportunity to hold grain until higher prices. “Their crops are so good they open new markets year after year,” said Head of Research at Marex Spectron broker Georgi Slavov. “Russia’s low supply-chain costs have helped to grab more business from suppliers like the US,” he added.

This season, Russia is expected to ship out 37,5 million tonnes and reclaim its ranking as the world’s top exporter thanks to the second-largest harvest ever.

By Anna Litvina