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    Grain sells // Exporters launch domestic sales

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    Large Russian grain exporters are diversifying their business amid continued difficulties with supplies abroad. Thus, Demetra Trading, the largest owner of which is VTB, plans to sell about 250 thousand tons of grain on the domestic market this season for local producers of flour and animal feed. The situation on the domestic market has developed in favor of the buyer, and it can be difficult for traders to make money without risks.

    One of the largest exporters of Russian grain, Demetra Trading, plans to develop a new direction of sales to the domestic market. Kommersant found information about this in the company’s financial statements. Demetra-Holding clarified that this season the company plans to sell about 250,000 tons of grain on the local market, mainly for flour and animal feed producers. In the reporting, the average profitability of domestic sales was predicted at the level of 300 rubles. per ton. The demand for grain within the country is twice the volume of exports, and Demetra Trading has all the necessary infrastructure for the development of domestic sales, the company notes.

    Demetra Holding belongs to VTB Group, Granum belongs to Taimuraz Bolloev and Marathon Group Alexander Vinokurov and Sergey Zakharov. Among the holding’s assets are the Novorossiysk Grain Terminal, shares in the Novorossiysk Bread Products Plant and the Taman grain terminal complex, the grain carrier Rusagrotrans by rail, elevators, etc. According to market participants, last season Demetra Trading was the second largest exporter grain from Russia with 4.5 million tons. The company’s turnover in 2021 is 110.32 billion rubles, follows from its reporting.

    With the outbreak of military operations of the Russian Federation in Ukraine and a new wave of Western sanctions, grain exports from Russia are limited by trade barriers: difficulties with freight ships, cargo insurance and bank payments, market participants reported. Despite all the claims about the possibility of deals with Russian food, problems persist, Reuters reported on August 14, citing traders. The Russian Foreign Ministry also said that the conditions for unhindered access of Russian food to world markets, provided for by the grain agreement in Istanbul, are not being met. According to Sovecon, in July, for the first month of the new season, Russia exported 2.2 million tons of wheat, the forecast for August is 3.3-3.7 million tons, which is below the average for this month in recent years 4, 9 million tons.

    Kommersant‘s interlocutors among large grain exporters note that mainly small traders with small volumes work in the domestic market, transactions here usually take place with a deferred payment, without premiums, there are also cases delaying payments, bankruptcy of counterparties, etc. According to one of Kommersant‘s sources, Demetra Trading may just try to take on additional risks and make money by reselling grain to buyers who cannot immediately pay for the goods. Another interlocutor of Kommersant adds that the company may have particular difficulties with exports after the introduction of US sanctions against VTB, due to which an excessive amount of grain has probably accumulated on the exporter’s balance sheet.

    Director General of the Institute situation on the agricultural market Dmitry Rylko says that large grain exporters do not yet seek to enter the domestic market, but there are certainly reliable buyers here, despite all the difficulties. These are the leading vertically integrated meat producers and the largest milling companies, he points out. The United Grain Company notes that they manage their own three enterprises for the production of flour and bran with a total processing capacity of 490 thousand tons of grain per year and are working to strengthen their positions in the domestic market. Arkady Gurevich, President of the Russian Union of Flour and Cereal Enterprises, estimates the need for industrial flour producers in grain in the amount of up to 12 million tons per year. the domestic grain market, the conditions here are now in many respects not in favor of traders. According to him, as a result of pressure from the tax service, the share of intermediaries has decreased, and due to the export duty, domestic grain prices have become less dependent on world prices, which has reduced the risks for buyers, who can now choose the best offers and stop storing large stocks. According to Prozerno, wheat of the third and fourth grades in the center of the country at the beginning of August cost 12.87–13.99 thousand rubles. per ton against 15.09–15.73 thousand rubles. per ton a year earlier.

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