The Black Sea grain agreement will expire, and the direction of Russian grain will attract attention

Despite the escalating Western sanctions against Russia, from July 2022 to June 2023, Russia will supply a record amount of grain to the global market. Russian Agriculture Minister Patrushev said that during this period, Russia’s grain exports reached 60 million tons. In the context of the withdrawal of large Western grain merchants from Russia and the possible termination of the Black Sea grain agreement, some Russian experts believe that Russian grain will not leave the international market. Significant exporters with a 20 percent share of food supply are excluded from international markets.

Multiple factors stimulate exports

According to the Russian “Kommersant” report, Patrushev said: “In 2022, Russia will harvest a record 157.7 million tons of grain, an increase of 29.9% year-on-year, including 104.2 million tons of wheat, an increase of 37% year-on-year. Currently , we predict that Russia will harvest 123 million tons of grain in 2023, of which 78 million tons will be wheat.”

Igor Stern, head of the analysis department of the State Bank of Russia, said that since last summer, changes in external trade rules and difficulties in chartering, insurance, and financing once caused Russia’s grain exports to lag behind plan, but grain traders Restructuring and increasing the supply to traditional grain importing countries in a short period of time ensured the export of Russian grain. For example, Russian grain exports to Saudi Arabia and Israel doubled from the previous year. In addition, Russia has also expanded the scope of grain exports, exporting grain to Brazil, Mexico, Iraq, Indonesia and other countries. In the past year, Russia exported about 60 million tons of grain, maintaining its status as the world’s largest grain exporter, accounting for 20% of the global market share. It was followed by Canada with 14.1% of global supply, followed by the United States with 13.5%.

While taking into account exports, Russia also ensures its own food security and has a huge grain inventory, which is expected to be about 20 million tons in 2023. The “Russia Today” website previously quoted Zlochevsky, chairman of the Russian Grain Association, as saying that in terms of grain production, after the record high yield in 2022, although Russia is unlikely to continue to set a new record in 2023, the harvest is enough to meet Russia’s demands. domestic demand and exports. “The outlook for Russian grain exports in the next agricultural year is bright,” he said.

Russia’s record high grain production is firstly due to the good weather in Russia in the past year, which is conducive to the growth of crops. Second, after the Crimean crisis in 2014, the West imposed sanctions on Russia, prompting Russia to pay more attention to agricultural investment, implementing preferential tax policies on agricultural facilities and chemical fertilizers, and stimulating enthusiasm for agricultural production. These have boosted Russia’s food production.

At the same time, the increase in grain production has promoted the rise of Russia’s grain exports. Zhang Hong analyzed: “After the outbreak of the conflict between Russia and Ukraine, although many Western countries imposed strict sanctions on Russia in the fields of finance and energy, in the field of agriculture, the main market for Russian grain is not Western countries, but the population of Africa and the Middle East. A big country. When global food prices rose, Russia also exported grain at a discount, and these countries increased their grain imports from Russia.”

“Russia cannot be excluded”

There are two channels for the export of Russian agricultural products, one is exported from St. Petersburg via the Baltic Sea, and the other is shipped via the Black Sea. Shipping via Heihe is cheap and is the main channel. Russia has always complained that Western countries still set up barriers and obstacles to the export of Russian agricultural products and fertilizers. For example, the four major Western shipping companies refused to ship Russian products. In addition, Russia’s grain and fertilizer storage and transshipment business in major European ports such as Amsterdam in the Netherlands have been rejected by Western port companies; in addition, Russia also believes that in terms of agricultural products and fertilizers, Western countries’ sanctions against Russia have not been lifted. The inability to use the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system for international settlement has a certain negative impact on its trade in agricultural products.

Russia’s “Expert” magazine also recently published an article saying that Russia’s grain exports still face some artificial obstacles. Large Western grain merchants Cargill, Vitra and Louis Dreyfus began to stop exporting Russian grain on July 1 and withdrew from the Russian market. At the same time, the prospect of the Black Sea Grain Agreement, which is about to expire on the 17th and aims to guarantee the export of grain and chemical fertilizers between Russia and Ukraine, is worrisome. Given that the West is unwilling to implement the Russia-related part of the agreement, the Black Sea food agreement is likely to be terminated.

In the context of the withdrawal of many large western grain companies from Russia and the possible termination of the Black Sea grain agreement, Russian expert Ivan Nikitin believes that Russian grain will not leave the international market. He analyzed to the “Expert” magazine that even if Traders all over the world refuse to help Russia, and it is impossible to exclude from international markets a major exporter with 20% of the global food supply.

“Egypt has been worried that the conflict between Russia and Ukraine will cut off its wheat import source, but the ‘worst case’ has not happened, which makes Egypt breathe a sigh of relief.” “Arab Economic Network” reported this way. According to Egyptian media reports, Russia is an important guarantee for Egypt’s food security, and it is not an exaggeration to call it a “strategic transportation line”. Egypt is the world’s largest wheat importer and the largest buyer of Russian wheat. A report in Egypt’s “Izvestia” quoted Orlov, chairman of the Russia-Egypt Business Council, as saying that Russia would increase grain exports to Egypt and other countries. The Russian embassy in Egypt recently announced that since July last year, despite the EU’s attempts to obstruct and sabotage, Russia has exported more than 8 million tons of wheat to Egypt, and this number will continue to rise.

Sino-Russian agricultural trade helps food security

According to Russian media reports, in the past year, 87% of Russia’s grain exports went to “friendly countries” such as China, Turkey, Egypt, Bangladesh, Algeria, and Pakistan. “After the outbreak of the conflict between Russia and Ukraine, Russia has introduced a series of measures to attract foreign investment and promote agricultural investment, including promoting Sino-Russian agricultural cooperation.” Zhang Hong said to reporters: “In the increasingly complex geopolitical situation, Food security is also of great strategic significance to China. On the one hand, it is necessary to ensure the domestic supply of basic grains and reduce dependence on foreign countries. On the other hand, it is necessary to continuously expand the source countries of food imports, such as increasing agricultural cooperation with Russia, and avoid relying on a few countries. The situation is also an important part of food security.”

Statistics show that in 2022, Russia will export agricultural products worth about US$7 billion to China, a year-on-year increase of about 41.4%. Agriculture-related exports are expected to reach US$10 billion in a few years, equivalent to 1.5 times the 2022 figure. According to the Russian Satellite Network report, in 2022, Russia’s grain supply to China will increase by 15%, of which wheat will increase by 78%. Mankevich, chairman of the Russian Federation of Asian Industrialists and Entrepreneurs, said that agricultural trade is an important part of Russia-China economic and trade cooperation. Russia is a major wheat exporter in the world and an important participant in the fertilizer market, while China is the largest food consuming countries. Russia’s trend of increasing grain exports to China is in the interests of both sides. Multiple factors stimulate exports

According to the Russian “Kommersant” report, Patrushev said: “In 2022, Russia will harvest a record 157.7 million tons of grain, an increase of 29.9% year-on-year, including 104.2 million tons of wheat, an increase of 37% year-on-year. Currently , we predict that Russia will harvest 123 million tons of grain in 2023, of which 78 million tons will be wheat.”

Igor Stern, head of the analysis department of the State Bank of Russia, said that since last summer, changes in external trade rules and difficulties in chartering, insurance, and financing once caused Russia’s grain exports to lag behind plan, but grain traders Restructuring and increasing the supply to traditional grain importing countries in a short period of time ensured the export of Russian grain. For example, Russian grain exports to Saudi Arabia and Israel doubled from the previous year. In addition, Russia has also expanded the scope of grain exports, exporting grain to Brazil, Mexico, Iraq, Indonesia and other countries. In the past year, Russia exported about 60 million tons of grain, maintaining its status as the world’s largest grain exporter, accounting for 20% of the global market share. It was followed by Canada with 14.1% of global supply, followed by the United States with 13.5%.

While taking into account exports, Russia also ensures its own food security and has a huge grain inventory, which is expected to be about 20 million tons in 2023. The “Russia Today” website previously quoted Zlochevsky, chairman of the Russian Grain Association, as saying that in terms of grain production, after the record high yield in 2022, although Russia is unlikely to continue to set a new record in 2023, the harvest is enough to meet Russia’s demands. domestic demand and exports. “The outlook for Russian grain exports in the next agricultural year is bright,” he said.

Russia’s record high grain production is firstly due to the good weather in Russia in the past year, which is conducive to the growth of crops. Second, after the Crimean crisis in 2014, the West imposed sanctions on Russia, prompting Russia to pay more attention to agricultural investment, implementing preferential tax policies on agricultural facilities and chemical fertilizers, and stimulating enthusiasm for agricultural production. These have boosted Russia’s food production.

At the same time, the increase in grain production has promoted the rise of Russia’s grain exports. Zhang Hong analyzed: “After the outbreak of the conflict between Russia and Ukraine, although many Western countries imposed strict sanctions on Russia in the fields of finance and energy, in the field of agriculture, the main market for Russian grain is not Western countries, but the population of Africa and the Middle East. A big country. When global food prices rose, Russia also exported grain at a discount, and these countries increased their grain imports from Russia.”

“Russia cannot be excluded”

Zhang Hong told reporters that there are two channels for the export of Russian agricultural products, one is exported from St. Petersburg via the Baltic Sea, and the other is shipped via the Black Sea. Shipping via Heihe is cheap and is the main channel. Russia has always complained that Western countries still set up barriers and obstacles to the export of Russian agricultural products and fertilizers. For example, the four major Western shipping companies refused to ship Russian products. In addition, Russia’s grain and fertilizer storage and transshipment business in major European ports such as Amsterdam in the Netherlands have been rejected by Western port companies; in addition, Russia also believes that in terms of agricultural products and fertilizers, Western countries’ sanctions against Russia have not been lifted. The inability to use the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system for international settlement has a certain negative impact on its trade in agricultural products.

Russia’s “Expert” magazine also recently published an article saying that Russia’s grain exports still face some artificial obstacles. Large Western grain merchants Cargill, Vitra and Louis Dreyfus began to stop exporting Russian grain on July 1 and withdrew from the Russian market. At the same time, the prospect of the Black Sea Grain Agreement, which is about to expire on the 17th and aims to guarantee the export of grain and chemical fertilizers between Russia and Ukraine, is worrisome. Given that the West is unwilling to implement the Russia-related part of the agreement, the Black Sea food agreement is likely to be terminated.

In the context of the withdrawal of many large western grain companies from Russia and the possible termination of the Black Sea grain agreement, Russian expert Ivan Nikitin believes that Russian grain will not leave the international market. He analyzed to the “Expert” magazine that even if Traders all over the world refuse to help Russia, and it is impossible to exclude from international markets a major exporter with 20% of the global food supply.

“Egypt has been worried that the conflict between Russia and Ukraine will cut off its wheat import source, but the ‘worst case’ has not happened, which makes Egypt breathe a sigh of relief.” “Arab Economic Network” reported this way. According to Egyptian media reports, Russia is an important guarantee for Egypt’s food security, and it is not an exaggeration to call it a “strategic transportation line”. Egypt is the world’s largest wheat importer and the largest buyer of Russian wheat. A report in Egypt’s “Izvestia” quoted Orlov, chairman of the Russia-Egypt Business Council, as saying that Russia would increase grain exports to Egypt and other countries. The Russian embassy in Egypt recently announced that since July last year, despite the EU’s attempts to obstruct and sabotage, Russia has exported more than 8 million tons of wheat to Egypt, and this number will continue to rise.

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