Russian Tax Hinders Global Wheat Traders Amid Bumper ExportsBy
Olam, Nidera exports fell even as Russia boomed, ProZerno says
Export tax probably hampered outbound sales, according to Ikar
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. Louis Dreyfus Co. reduced supplies 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.
Spokespeople for Olam and Nidera declined to comment when contacted by Bloomberg.
“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.
While ProZerno’s figures showed Cargill Inc. supplies were down 11 percent, making it the No. 3 exporter, the trader said about 200,000 tons of sales were missing from the data.
The company’s exports were stable because its port terminal in southern Russian city of Rostov-on-Don was closed for an equipment upgrade for half a season until the end of June, Cargill spokeswoman Corinne Holtshausen said by e-mail.
Some of the global companies did boost sales.
OOO International Grain Co., Glencore International AG’s Russian unit, expanded sales by 17 percent to keep its place as No. 2 exporter, and Bunge Ltd. boosted supplies 3 percent to become the seventh-largest shipper, ProZerno’s figures show. Glencore declined to comment, while the remaining companies didn’t respond to requests for comment.
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, according to ProZerno.
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 through 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.