Turkey's wheat import structure changes as more grain come from Ukraine in 2021-22

Wheat

Ukraine

Turkiye

Market & Price Trends

Published Mar 7, 2022

Russia is one of the major wheat suppliers to Turkey, with Russia’s shipments reaching 6.36 million mt in MY2020-21 or 78% of total imports. However, Turkey has recently boosted purchases of Ukrainian wheat due to the introduction of export tax on wheat in Russia. High inflation in Turkey has also made the country switch to cheaper cereal alternatives. In June-December of MY2021-22, Turkey imported 1.47 million mt of wheat from Ukraine, 237% more YoY. At the same time, the war in the Black Sea region may shift Turkey's major market to other international suppliers for the rest of the season.

Turkey has ramped up wheat imports in the current season amid a fall in the harvest by 11% YoY to 16.5 million mt. However, the country's cereal import patterns have changed in MY2021-22. Turkey has started to diversify wheat purchasing sources. After Russia introduced wheat export duties in February 2021, the price became less competitive in the international market. In June-December of 2021-22, Tukey imported 4.09 million mt of Russian wheat, down 3% compared to the same period of MY2020-21. At the same time, the delivery from Ukraine jumped to a record 1.47 million mt, almost 2.5 times more YoY.

Source: ITC Trade Map

Russia's share in Turkey's wheat imports contracted by 11% YoY in MY2021-22. At the same time, Ukraine's share rose by 12% YoY to 23% in the current marketing year. Another surprise was the ramping up of Moldova's grain shipments to Turkey, which surged to 395,500 mt in the first seven months of 2021-22. Such a shift in the Turkish wheat supplier structure is happening because the country is opting for the cheaper commodity offered by the mentioned countries. The weakening of the Turkish lira against the USD, gaining momentum since March 2021, has made the county's imports more expensive when selling in the domestic market. Therefore, the import price has become a sensitive topic for Turkish grain importers. As of March 1, 2021, 1 USD was worth 7.42 TRL, while on the same date this year, the USD/TRL parity plummeted to 14.03.

Due to the ongoing war between Russia and Ukraine, Turkey will need to turn to other global wheat exporting countries to meet the domestic demand and keep flour manufacturing. Flour is crucial for Turkish agricultural exports because the country is the world's top wheat flour supplier. USDA pegs Turkish wheat imports this season at 11 million mt, up 3 million mt YoY. Although there are still no figures on how much was imported in January-February 2022, statistics show that the three-year average of Turkish wheat imports in March-May accounted for 24% of the total imports, meaning that traders may buy another 2.64 million mt of wheat by the end of the season.

Should the conflict between Russia and Ukraine persist for longer, Turkey will need to find alternative supply sources, including Argentina, Australia, or Canada. The delivery time from the mentioned countries is longer than the Black Sea region, and price bids are steeper. Higher import prices will increase the production costs of fresh flour batches, making it less competitive for export sales and thus capping export potential.