Strong Harvest Forecast
Türkiye is anticipating a wheat harvest of 21 million tons for the 2024/25 season, according to forecasts by the TurkStat Institute. This figure represents a 4.5% decrease from the previous season, but the quality of wheat remains high across most regions.
Current Wheat Stocks
The International Grains Council (IGC) reports that Türkiye’s wheat stocks are at 8.1 million tons, which is 1.5 million tons lower than last year’s levels but still significantly higher than the average.
Government Measures and Market Reactions
In response to high production and substantial stocks, the Turkish Grain Board (TMO) is purchasing wheat at low prices, a move that has not been well-received by farmers dealing with 75% inflation. To address this, Turkish authorities implemented a ban on wheat imports starting June 6. Many domestic market participants believe this ban may be extended until the end of 2024, depending on wheat stocks and quality.
The market reacted to the import ban by reducing prices, notably impacting freight costs in the Sea of Azov and the Sea of Marmara, areas previously active with wheat deliveries from the Russian Federation. Freight rates for cabotage transportation of wheat from Russia to Türkiye have decreased from $28-30 per ton to $13 per ton.
Implications for Russian Wheat Exports
With Türkiye’s import ban in place, Russia will need to find new markets for its wheat. Likely destinations include Egypt, Syria, and other North African countries, increasing competition with Ukraine, which also exports wheat to these regions.
Upcoming Diplomatic Discussions
The market is closely watching the upcoming meeting between the presidents of Türkiye and Russia, scheduled for July 3-4 in Astana. Russia is expected to request an exemption from the wheat import ban to continue its supplies to Türkiye.
No Immediate Plans for International Tenders
According to broker Kronmark Turkey, the TMO does not currently plan to hold an international tender for wheat purchases due to the significant stocks already in the country. Future purchases will depend on domestic demand for wheat.
As Türkiye navigates its wheat market dynamics with high stocks and a strong harvest, the potential extension of the import ban reflects the country’s strategic approach to managing local supply and demand. Stakeholders should monitor the outcomes of diplomatic discussions and market adjustments to anticipate future trends and opportunities.