Kazakhstan cuts wheat prices ahead of higher rail logistics costs

Kazakh exporters are accelerating grain shipments and cutting prices ahead of an expected increase in railway tariffs. According to analyst Yevgeny Karabanov, logistics costs have already risen by 10–15%, or $3.5–5.5/t, and could increase by another $3–4/t after September 10 due to new tariffs on the country’s main railway network.

Kazakhstan’s market is facing additional pressure from sharply lower Russian wheat prices. Problems with exports through Black Sea and Azov Sea ports, a large crop in southern Russia and the Volga region, and a weaker ruble are boosting Russian grain offers to Kazakhstan and other Central Asian markets. Russian wheat of comparable quality is being offered at prices $10–15/t below Kazakh wheat.

As a result, importers remain cautious about buying large volumes of Kazakh grain, expecting further price declines and hoping to secure cheaper wheat from Russia. Kazakh wheat export prices fell by $2–5/t over the week depending on quality. Class 3 wheat is currently offered at around $247–285/t DAP Saryagash depending on gluten content, while Class 4 wheat is quoted at $241–245/t.

Lower grain prices are already affecting processed products. The export price of first-grade wheat flour on a DAP Saryagash basis declined by $5/t over the week to $300–305/t, while feed flour prices on the Dostyk/Altynkol route fell by $3/t. Barley prices remained unchanged, although export activity continues to be weak amid ample supply.

Rising Caspian logistics costs due to a shortage of vessels are creating another challenge. Freight rates from Aktau to northern Iranian ports jumped by $17/t over the week to $55/t, while rates from Astrakhan rose by $19/t to $81/t. Kazakh exporters are therefore facing pressure from both sides: competition from cheaper Russian wheat is forcing prices lower, while grain transportation costs continue to rise.

Tags: Kazakhstan, export, prices, wheat, rail transportation