Russian Grain Trader Beating Cargill to Olam as Exports SurgeAnatoly Medetsky
Russia’s OOO Trading House RIF beat international competitors from Olam International Ltd. to Cargill Inc. to become the country’s second-largest grain exporter after it boosted shipments more than eightfold.
RIF shipped 1.95 million metric tons of grain in the season ended June 30, giving it an 8 percent share of Russia’s exports, data from the National Association of Exporters of Agricultural Products show. Glencore Plc was the top exporter with a 13 percent share, Olam ranked third and Cargill fourth.
The company’s shipments surged more than any of Russia’s top 20 exporters after the terminal on the Don River it uses trebled capacity last year, according to Petr Khodykin, who owns RIF and has a controlling stake in the southern Russian port. The country’s grain exports rose 62 percent to 25.4 million tons last year, the Agriculture Ministry said July 7.
“It was completely unexpected,” said Sergei Balan, the association’s president. “It’s really a new player. It came out and seized a dominant position,” he said of RIF.
Glencore’s Russian unit International Grain Co. shipped 3.17 million tons last season, up 33 percent from the previous 12 months, according to the association. RIF’s exports surged from 231,000 tons in the 2012-2013 season, when it ranked No. 14, according to the data posted on the association’s website this month. Glencore and Cargill declined to comment on shipment volumes in Russia and Olam had no immediate comment.
Founded in southern Russian city of Rostov-on-Don in 2010, RIF exported all its grain through the terminal owned by OOO Promexpedition, which increased capacity to 250,000 tons a month after an upgrade that ended last August, Khodykin said in a phone interview Aug. 8. The port ships about 2.25 million tons a year as it’s covered in ice for three months, he said.
Khodykin, 44, who said he disclosed for the first time his ownership in RIF and Promexpedition, said the original plan for the port was to ship grain for other exporters.
After getting no commitment from trading companies by the start of last season because the outlook for Russia’s harvest was unclear, Khodykin said he decided to increase RIF’s exports to load the terminal as much as possible. RIF plans to remain the only user of the terminal this season, he said.
RIF’s advance in the ranking follows Olam becoming No. 2 exporter from No. 13 in 2012-2013 season after it bought a terminal in Azov and more than doubled shipments. Olam exported 1.85 million tons of grain from Russia last season, or 41 percent more year-on-year, the association’s data show.
Having the same owner as the terminal probably lowered RIF’s costs compared with some other traders, according to Vladimir Petrichenko, director of market researcher OOO ProZerno. It also didn’t have to compete with others for port capacity, he said.
RIF mostly exports to Egypt, Saudi Arabia, Turkey and United Arab Emirates, with wheat accounting for about 60 percent of the shipments, Vadim Sarkisov, the company’s chief executive officer, said in a phone interview from Rostov.
The company started by selling grain to larger traders before exporting on its own account, according to Khodykin. He said he entered cereals trading in 2004 with construction of the initial Promexpedition terminal, in which he had a 20 percent stake. He bought control of the port in 2011.
Promexpedition plans to expand the terminal’s capacity to 350,000 tons a month and add as much as 30,000 tons of storage, Khodykin said. The sanctions that the U.S. and European Union put on Russian banks because of the conflict in Ukraine may get in the way, he said.
“It’s not easy to make a guess about the timeline for the project, given the latest political events,” he said. “Access to credit is being clipped all around the place.”