Russian Tax Chills Global Wheat Traders’ Share of Bumper Exports
Global grain traders such as Olam International Ltd. and Nidera BV reduced Russian exports last season even as a bumper crop and weak ruble made the nation the biggest wheat supplier, said a Moscow-based researcher.
Volumes shipped by Olam slumped 23 percent and Nidera’s fell 15 percent, according to Russian customs data compiled by consultant OOO ProZerno. Cargill Inc. also reduced supplies by 11 percent and Louis Dreyfus Co. by 6 percent, the figures show.
The declines, even amid a Russian export boom, were probably the result of a decision by the nation to impose a tax on wheat shipments from the start of the season in July 2015, according to Dmitry Rylko, director general of the Moscow-based Institute for Agriculture Market Studies, or Ikar. The sliding-scale tax, linked to the volatile exchange rate, left companies uncertain on the size of the levy and discouraged global traders, he said.
An Olam spokesman declined to comment, while a Nidera official wasn’t immediately able to respond to questions on shipments when contacted by Bloomberg.
Chilled Buying
“The tax, of course, chilled their purchases,” said Petr Khodykin, owner of Russia’s largest grain exporter OOO Trading House RIF. “With an unclear perspective for the market,” they weren’t sure how much they would sell abroad, he said by phone.
In addition, continued sanctions against Russia over the conflict in neighboring Ukraine would have added to international traders’ concerns over market risks, he said.
Some of the global companies did boost sales, with Cargill retaining its position as the No. 3 exporter, according to ProZerno.
OOO International Grain Co., Glencore International AG’s Russian unit, expanded sales by 17 percent, to maintain its place as No. 2 exporter, while Bunge Ltd. boosted supplies 3 percent to become the seventh-largest shipper, ProZerno’s figures show. Glencore declined to comment and the other companies didn’t respond to requests for comment.
Faster Pace
Still, some Russian companies expanded trade at a much faster pace. They were more willing to accept the risks from the tax, Rylko said. The levy is set at half a shipment’s customs value, minus 6,500 rubles ($98) a ton. The customs value, denominated in U.S. dollars, can vary widely when converted into rubles given exchange-rate swings.
RIF increased outbound grain shipments 74 percent to 4.4 million metric tons, or 13 percent of Russia’s record grain exports of 33.9 million tons.
OOO Mirogroup Resources doubled deliveries to 1.1 million tons. OOO Yuzhny Tsentr and OOO Yuzhnaya Syryevaya Kompaniya, which ProZerno says have the same controlling owner, boosted their combined exports 95 percent to 1.5 million tons.
Yuzhny Tsentr was able to borrow from banks to boost sales and agreed to start shipping via PJSC Novorossiysk Commercial Sea Port, one of the nation’s largest deep-water terminals on the Black Sea, Artem Surov, the trader’s director general, said by e-mail.
Still, exporters are pushing for Russia to end the levy as the nation expects its biggest grain crop this year. The Agriculture Ministry is preparing proposals to be discussed by the Cabinet, Deputy Prime Minister Arkady Dvorkovich said July 26.
Egypt ranked as the biggest importer of grains from Russia, followed by Turkey and Saudi Arabia, according to ProZerno.
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