Turkey bringing up a competitor for Ukraine in the flour market

31.05.2017

This past week, the market was set in turmoil by a reported new turn in the Russo-Turkish agri-trade relations. According to trade sources, Turkey’s purchases of Russian wheat will not exceed 20-25% of the country’s import needs, while Russian sunoil will fill at most 15-30% of its needs. The decision may impact the market significantly because the wheat share reached 75% in previous seasons.

The Economy Ministry of Turkey denied this information and assured that it clearly observes clearly follows the agreement with Russia on lifting the trade restrictions. However, before the denial’s release, this information was confirmed both by Russian president’s press secretary Dmitry Peskov and member of the Istanbul Exporters' Association’s management board Zekeriya Mete. The latter claimed that these measures had been taken by the decision of Turkish exporters and supported by Turkey’s Economy Ministry.

Any official confirmation is unlikely to appear. It should be kept in mind that licenses for wheat supply for domestic processing are issued in Turkey (such licenses allow duty-free grain imports to the country for subsequent export of flour). The problem can be solved at the level of internal regulations. 

Also, Turkey’s plans to diversify the sources of grain and vegoil arrivals are indirectly confirmed by a Black Sea region tour by representatives of the Turkish flour millers’ association.  Processing companies are on the active lookout for new suppliers, investigating possibilities for return to old feedstock channels.

This means a shortfall of some 2.5 MMT in Russian wheat deliveries to Turkey. This volume will have to be marketed through other outlets, either export or domestic ones. Maybe, the wheat surplus will drive the flour milling industry’s development. In this case the scenario becomes still more interesting: limiting the commodity flow from Russia, Turkey will bring up a new rival in the flour market not only for itself but also for Ukraine, UkrAgroConsult notes.

Full version of the article is available to subscribers for weekly market report “Black Sea Grain & Oil” and “Online market review” by UkrAgroConsult.

 

UkrAgroConsult

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