Source: Zerno.ru (Russia)
The BRICS Grain Exchange proposed by Russia could be transformed into a full-fledged commodity exchange in the future, Russian President Vladimir Putin said.
“In time, we could also think about transforming the grain exchange into a full-fledged commodity exchange,” the president said at a meeting of the expanded BRICS summit in Kazan on October 23, Interfax reported.
Noting that a number of BRICS countries are among the largest producers of grains, pulses and oilseeds, Putin said that “the creation of a grain exchange will contribute to the formation of fair and predictable price indicators for products and commodities,” with food security in mind.
“The implementation of this project will help protect national markets from negative external interference, speculation and attempts to create artificial shortages of food products,” the Russian president emphasized.
The Kazan Declaration on “Strengthening Multilateralism for Equitable Global Development and Security” adopted at the Summit states: “We are committed to promoting rules-based trade in agricultural products and fertilizers and minimizing disruptions to ensure uninterrupted supply of food and agricultural inputs, which must be protected from unreasonable restrictive measures of an economic nature inconsistent with WTO rules, including those affecting the production of agricultural products and fertilizers. In this context, we welcome the initiative of the Russian side to establish a trading platform for grain (commodities) within the framework of BRICS (BRICS Grain Exchange) and to further develop it, including the involvement of other agricultural sectors”.
As previously reported, the BRICS Grain Exchange was proposed by the Union of Grain Exporters. At a meeting with representatives of the agro-industrial complex in the Stavropol region in March this year, Putin supported the idea of establishing such an exchange, describing it as very good and promising to work it out with partners.
According to the Union’s calculations, grain production in the BRICS countries (including the countries that joined this year) amounts to 1.24 billion tons per year (44% of the global total), and consumption will be as close as possible to production at 1.23 billion tons (also 44%). The situation will be similar for wheat, with production of 377 million tons (48%) and consumption of 374 million tons (47%). Maize production will reach 501 million tons and consumption 484 million tons. Both figures correspond to 40% of the global figure.
The Union justified its proposal, which was set out in a letter to the Ministry of Agriculture, with the fact that the current infrastructure of the world grain market was created after the Second World War, with supplies of wheat and maize from the USA dominating. The market benchmarks, which are also used by the BRICS countries, are formed on the basis of the quotations for grain on the Chicago Mercantile Exchange (CME). The US dollar is mainly used as the clearing currency.
“The BRICS countries, which are the main participants in the global grain market, cannot fully participate in the pricing of such important agricultural commodities as wheat, barley and corn, whose world market prices are formed and often manipulated in third countries,” the letter states.
The answer to this situation could be the formation of a unified BRICS trading and clearing infrastructure, within which grain trade between the companies of the association’s member countries is handled. “Russia has gained unique experience in creating high-tech, productive and reliable exchange trading and clearing platforms (one example is the Moscow Exchange Group). In addition, it has accumulated rich experience in the field of exchange technologies for commodity exchanges, in the organization of settlements in the currencies of the BRICS countries and in the inclusion of participants from different countries in the unified exchange trading and clearing infrastructure,” the letter reads.