High-Priced Russian Wheat Pushes Turkey to Seek Alternative Suppliers

Published 2021년 12월 11일

Wheat prices for Russia, the leading global wheat exporter, and Turkey’s leading wheat supplier, have skyrocketed due to the country’s export tax and a potential export cap. This has pushed Turkey, the third-largest wheat importer, to seek wheat supplies from other origins such as Argentina, Brazil, and the EU. According to the Moscow Exchange (MOEX), the Russian government raised its wheat tax by USD 2.25 per metric ton to USD 80.80 per metric ton, for the upcoming December 1-7 period, with the government likely to raise the tax further to stabilize the local wheat market.

Turkish traders and millers have had to turn to alternative origins as Russian wheat availability is increasingly uncertain due to the country’s upcoming export quota and the export tax. The increasing export tax and upcoming export quota, which the Russian government will place during the second half of the marketing year, has made Russian wheat prices uncompetitive in the global market. As a result, there is a dearth of wheat sellers for later, deferred loading dates. Currently, the available offers in the market are for spot loading positions for December loading.

The EU emerges as the preferred source for high protein wheat

According to the Agricensus Export Dashboard, Russia exported 7.72 million metric tons of wheat to Turkey in 2020, 75% of Turkey’s total imports, and exported 5.1 million metric tons between January and September 2021. According to the Turkish Grain Board (TMO), the EU is the second-largest wheat supplier to Turkey, shipping 1.33 million metric tons in 2020, and has emerged as an alternative origin for high protein wheat to Turkey. Deals for wheat with 14% protein content are now being actively negotiated for February 2022, loading from Baltic ports.

Rising domestic prices boost wheat trade between Argentina, Brazil, and Turkey

Turkey has been affected by several factors that have pushed domestic prices up. The country’s wheat production has been hampered by poor weather conditions. The Turkish lira also collapsed on international currency markets, adding further pressure to domestic wheat prices as the weak lira pushed importers to pay more for dollar-denominated commodities, provoking the TMO to secure wheat supply and cap upward price movement.

The TMO has initiated a tender-based wheat buying strategy from countries such as Argentina and Brazil. According to the Agricensus Export Dashboard, there has been no wheat trade between Argentina and Turkey since 2012. However, Turkey’s efforts to cap local wheat prices in the face of a sliding value of its currency and rising global prices have resulted in Turkey importing Argentinian wheat. Argentinian 11.5% wheat shipments have entered Turkey priced at USD 352 per metric ton (CFR Turkey). Wheat shipments from Brazil to Turkey have also been secured for February loading. The TMO has booked 385K metric tons of milling wheat for shipment between January 10-31.