Cargill Plans to Quit Russian Grain Terminal Operations

Privately-held agribusiness giant Cargill is quitting its Russian grain terminal operations within a few months' time, the firm said in a brief statement Wednesday. 

Citing "grain export-related challenges" for the decision, U.S.-based Cargill will stop loading out Russian grain onto bulkers in July. It still plans to continue trading and shipping Russian grain, and its activities in other agricultural commodities are unaffected. 

The decision impacts Cargill's terminal operation at the Black Sea port of Novorossyisk, the Kombinat Stroykomplekt complex. Cargill purchased a minority stake in the facility in 2013. According to majority owner Delo Group, the terminal has been setting all-time records with its grain exports in recent months.

Russia's agriculture ministry said in a statement that Cargill's withdrawal would not affect grain cargo operations.

The commodities trading house Viterra is expected to exit the Russian market as well, according to Bloomberg, but has not yet made a formal announcement. The two firms are the top Western players in Russia's grain export trade, though their volumes are dwarfed by others like Russian trading house TD Rif and Turkey's Aston. 

The announcements are a setback for Russia's goal to secure more foreign participation in its grain export trade. For months, Russian diplomats have complained that the UN-backed Black Sea Grain Initiative has been one-sided, arguing that it favors Ukrainian agricultural exports without an equivalent boost in purchasing for Russian fertilizer and wheat cargoes. These commodities are exempt from Western sanctions, but the reputational risk and the friction of doing business with the Russian financial system have deterred many Western traders.

The reduced level of trade has upset Moscow, and during the latest renewal negotiations for the grain agreement, Russia refused to guarantee its participation beyond 60 days - far short of the 180-day renewal cycle observed previously.