Russian grain chief: The idea of BRICS exchange is gaining traction.

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Russian grain leader: The concept of BRICS exchange is becoming increasingly popular. 

Russian grain chief: The idea of BRICS exchange is gaining traction.
On July 17, 2021, combines gather wheat in a field close to Suvorovskaya hamlet in the Stavropol Region of Russia.Reuters file image

According to the chairman of the Russian Union of Grain Exporters, a Russian proposal for a BRICS grain market that would enable purchasers to buy directly from producers is gathering steam ahead of the group's October meeting. The proposal is supported by President Vladimir Putin.

Given that China and India are the world's two largest producers of wheat and Russia is its largest exporter, any transaction including the BRICS nations—Brazil, Russia, India, China, and South Africa—as well as Egypt, Ethiopia, Iran, and the United Arab Emirates, would have international influence.

The head of the Russian Union of Grain Exporters, Eduard Zernin, told Reuters he hoped that by the time of this year's BRICS meeting in Kazan, Russia, organizational problems pertaining to the exchange would be settled.

Zernin claimed that firms across several nations have endorsed the plan.

He continued, "We have observed comprehension and support for the initiative," and "there is a great deal of interest in our initiative."

The primary issue, according to Zernin, with conventional commodities exchanges is that they are controlled by "speculators," such as hedge funds that deal in commodity derivatives, and as a result, prices have fallen below the cost of production.

"We think it is in the best interests of real grain buyers and sellers to remove such extreme volatility and improve the global grain market's transparency and predictability."

We refer to it more as a "exchange" here. Zernin stated, "Ideally, we want to be discussing a cutting-edge, contemporary digital marketplace.

The rationale behind the use of a BRICS market by major purchasers like China and Egypt, who can now select the best deal from a larger pool of sellers that may include the European Union or Ukraine, was initially unclear. 

Exchange


In early March, Putin endorsed the idea of a BRICS grain exchange, which was first proposed by Rusgrain in December.

Zernin stated that the exchange was "not against the dollar" and that non-BRICS nations would also be able to access it.


He declared, "The BRICS nations export more wheat, rice, and corn than any other country." "Our contribution to the global pulse market's supply is equally important."

"We do not demand that the dollar be kept out of grain settlements. However, Zernin stated, "free conversion of the exchange's clearing currency into roubles is crucial for us."

Compared to 60 million tons in the previous marketing season, Russian grain exports are expected to reach 65 million metric tons in the current 2023–2024 season. The Federation of Russians
"Despite issues with trade financing, insurance, and settlements, grain exports are moving along nicely so far," Zernin stated. About 47 million tons of grain, including roughly 36 million tons of wheat, have been exported from Russia to date.

Russia has increased shipments to Algeria, Indonesia, and Bangladesh in addition to its primary grain customers in Turkey, Egypt, and Iran.


According to Zernin, "the Russian grain markets appear more diversified now than they did prior to the geopolitical crisis."

"We concentrated on grain diplomacy, establishing direct contacts with the world's largest importers of wheat and other grains, to make up for the disappearance of international intermediaries from our supply chains," he continued.

"There was little delay in the outcome." 
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