Turkish Flour Exports Continue to Increase Despite High Production Costs

Published 2022년 6월 2일

Turkey’s wheat flour exports rose to 2.83 million mt from June to April 2021-22, up 4.5% compared to last year. Although Turkish millers face increasing production and logistics costs, the upward trend has remained throughout the season. The most significant factor behind the positive dynamics is firm import demand from the Middle East and African countries, caused by the rising population and changing eating habits towards higher wheat product consumption.

2021-22 production season is full of challenges for Turkish millers. Flour producers are facing a surge in electricity costs caused by higher gas prices. According to the Turkish Statistics Office, in H2 2021, electricity prices for industry jumped by 70% YoY. Following a severe drought, the country’s wheat output plunged to 16 million mt, down 14% YoY, triggering the rise in domestic prices and the imports of more expensive foreign wheat.

Despite the mentioned-above obstacles, local exporters have boosted flour shipments in the 2021-22 season thanks to robust demand from the central importing countries. Higher international flour prices have added more stimulus to Turkish millers to build up exports to get larger margins. From June to April 2021-22, the average export price for Turkish flour rose by 43% to USD531/mt in April 2022. Because of higher prices, the flour export value reached USD1.17 billion in the first eleven months of the current season, up 31% YoY.

Source: ITC Trade Map, Turkish Statistical Institute

Iraq is the largest buyer of Turkish flour, accounting for 43% of Turkish supplies in 2021-22. Despite more investments into its milling industry and increasing numbers of milling companies, Iraq still relies heavily on shipments from its western neighbor. Iraqi mills do not operate at the highest capacity due to a lack of raw materials. They do not process wheat throughout the whole year, leading to an increase in variable costs. Those mills also use imported wheat, whose prices have jumped in the current season because of the global tightening stocks and the weakening Iraqi dinar. These factors make local flour more expensive compared to the Turkish produce. From June to April 2021-22, Turkey exported 1.22 million mt of wheat flour, down 1.5% YoY.

From the long-term perspective, Iraq’s demand for Turkish flour is projected to decline gradually as the country builds up its flour output. Therefore, Turkey has begun to diversify flour exports, with shipments to Djibouti, Angola, and Kenya rising in the last two seasons.