Rare Argentina wheat arbitrage yields cargoes for Turkey: trade

Turkey’s attempts to cap domestic wheat prices in the face of a sliding value of its currency and strong global prices could have resulted in two cargoes of Argentinian wheat being booked for import into the country, trade sources have told Agricensus Tuesday.

Traders reported at least one cargo of 11.5% wheat booked at $352/mt CFR with a major international player selling to two local importers, one December loading position and one for January.

A trader described the move as “not usual” with a second source describing strategic planning behind the purchases – which are thought to be on top of recent tender-based buying from the country’s state-backed grain importing agency TMO.

“Our sales area is very wide and these transactions are a strategic move,” the second source said.

“It is an extraordinary time… and we need to make sure our customers see ahead,” the source said.

Turkey has been hit by a potent cocktail of factors that have driven domestic prices higher and caused discomfort for the government as the price of staples surges.

Poor weather conditions have hampered the country’s own wheat production, but wider weather problems have supported global wheat prices and driven prices higher for end users all across the world.

Into that mix, the value of Turkey’s lira collapsed on international currency markets after the government decided to cut interest rates in a move that went against advice of economists.

That added further upward pressure to domestic prices as the weaker lira forced importers to pay more for any dollar-denominated commodities, and provoked wider action from TMO as it sought to secure supply and cap further upward moves.

Trade sources at the time forecast that Turkish buying was likely to continue despite the heavy falls in the value of the currency.

The Agricensus Export Dashboard shows no volumes of wheat moving from Argentina to Turkey since at least 2012, according to government export data – with only increasing volumes of corn.