Political instability in Kazakhstan: possible consequences for the grain market

Author:  Maryna Marynych

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Kazakhstan is one of the top 10 exporters of wheat and the second biggest exporter of flour in the world market. As a supplier, Kazakhstan occupies the lion’s share of the grain market in Central Asian countries (Uzbekistan, Afghanistan, Tajikistan, Turkmenistan, etc.).

The current political events in Kazakhstan have caused Internet service interruptions and the suspension of banks in major cities of the country. Therefore, foreign exchange transactions requiring prepayment may be delayed in the near future that may slow down the Central Asian grain trade to some degree.

In the medium term, the political and financial instability may lead to stricter border control over the export of goods (including grains), which may push up wheat and flour prices in the region.

The government will likely attempt to control domestic prices of socially important foods in order to avoid shortages and rush demand.

Amid a grain crop failure in Kazakhstan in 2021, wheat imports from Russia could reach 4 MMT according to some estimates. However, in view of the unstable situation, this volume may end up at a still higher point.

On the other hand, the current situation will adversely affect the economic condition of Kazakhstan that may consequently lead to a depreciation of the national currency. The devaluation of the Kazakh tenge, in turn, could make grain from Kazakhstan more competitive than that from Russia. This would be beneficial to Kazakh growers in the long term.

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