Turkey’s wheat importers seek new origins on Russian uncertainty

Russia, Turkey’s number one wheat supplier, has been outpriced in the market, as the country’s export tax and a potential cap on exports has supported prices across the region and forced Turkish importers to seek wheat cargoes from other origins like Argentina, Brazil, and Europe.

Two Argentinian 11.5% wheat cargoes were reported traded earlier this week, with the price rumoured at $352/mt CFR Turkey.

Trade sources reported that another South American wheat cargo traded to Turkey today, basis Brazilian origin but this time for February loading.

The details of the trade were not yet available by press time, but underscore a trend that has forced importers to look to other origins.

According to Global Trade Tracker, Argentinian exporters have shipped just 188,031 mt of wheat to Turkey between 2000-2021, while Brazilian wheat exports to Turkey stand at 197,150 mt during the same period.

But Turkish traders and flour millers have had to shift to alternative origins to source wheat as the availability of Russian wheat is increasingly ambiguous due the country’s upcoming export quota and the export tax, which is steadily increasing each week and now stands at $80.80/mt.

The high export tax and upcoming export quota, which the Russian government will set for the second half of the marketing year, has made Russian wheat uncompetitive in price and means there is a dearth of sellers for later, deferred loading dates.

Currently, the only offers heard in the market are for spot loading positions only, effectively for December loading only.

According to the Agricensus Export Dashboard, Russia supplied 7.72 million mt of wheat to Turkey in 2020, accounting for 75% of total imports, with 5.1 million mt exported between January and September of 2021.

Europe, the second-biggest wheat supplier to Turkey, with 1.33 million mt shipped in 2020, has been an alternative origin for high protein wheat, that is often sourced for tenders issued by the Turkish Grain Board (TMO) from Germany, Poland, Lithuania and Latvia.

With European 11.5% and 12.5% wheat cargoes uncompetitive in price for Turkey, despite the freight advantage over South America, wheat with 14% protein content is now being actively negotiated for February loading from Baltic ports for TMO backing.

The offers were reported at a €17/mt premium over the March Euronext wheat contract, while bids were heard at €14/mt over March.