Russia wants BRICS countries to create their own grain exchange

The BRICS countries may create their own exchange for grain trading. Eduard Zernin, Chairman of the Russian Union of Grain Exporters, announced the corresponding proposal.

Recall that from January 1, 2024 the founding countries of BRICS (Brazil, Russia, India, China, South Africa) will be joined by new members – Egypt, Ethiopia, Saudi Arabia and the UAE. Argentina, after the election of President Javier Miley, refused to join the organization.

The new composition of BRICS includes both the world’s largest buyers of grain (Egypt – 19.8 million tons, China – 54 million tons) and the largest producers.

The five BRICS countries in 2023 produced a total of 1.17 billion tons of grain (42% of world production). After the BRICS expansion on January 1 at the expense of the five new countries, the group’s grain production will reach 1.23 billion tons per year (44% of world production), and consumption will be as close to production as possible – 1.22 billion tons (also 44%).

The current infrastructure of the world grain market has developed since World War II, dominated by wheat and corn supplies from the United States. Today, market benchmarks used by the BRICS countries, among others, are based on the quotations of grain crops on the Chicago Mercantile Exchange (CME). The clearing currency used is mainly the US dollar.

According to Zernin, this leads to the fact that the BRICS countries cannot fully participate in the formation of world prices for agricultural products and become hostages to manipulations on the U.S. exchange.

The creation of a unified BRICS trading and clearing infrastructure, within which grain will be traded between companies of the BRICS member countries, is intended to remedy the situation. At the first stage, trading will be possible in the currency of any of the member countries, and in the future a special clearing currency may be created,” Eduard Zernin dreams.

Tags: BRICS, Russia, grain, grain stocks