Turkey’s wheat farmers await state price amid criticism of higher-priced imports
As the wheat harvest begins in Turkey, the country’s state grains board will soon set the price at which it buys grains on the domestic market — a fraught political moment with the government under fire for paying far higher prices for imported supplies.
Turkey is one of the world’s largest wheat importers and its farmers are blocked from selling the grain for export. Like other major importers, such as Algeria and Egypt, its state grains board is one of the largest buyers on the global market, holding regular tenders in which it procures as much as 400,000 mt on a single day.
The Turkish board, TMO, sells wheat at subsidized prices to Turkish flour mills to ensure that bakeries can provide lower prices bread at official outlets, which attract large queues in cities like Istanbul, where those products are around half the price of commercially-produced bread.
TMO held its most recent tender for imported wheat on April 29, when traders said it made provisional purchases of 480,000 mt of wheat, with the lowest parcel offered at $409/mt ex-bonded warehouse for 12.5% protein wheat. However, TMO cancelled those purchases a day later, and several Geneva-based traders said that TMO had requested offers below $400/mt CFR Turkey.
TMO’s cancellation might have been a response to political pressure in Turkey, where the tender price triggered critical newspaper headlines, given that TMO’s price for domestic purchases is far lower.
Tukey’s wheat farmers have not always lost out through TMO’s import tenders — when there is a small crop in Turkey there is no discount for domestic wheat and TMO’s purchases are exclusively from the global market.
However, after Turkey’s wheat crop in May 2021, TMO set its purchase price at Turkish lira 2,250/mt for its benchmark grade, Anatolian
Hard Red Milling Wheat. That was equivalent to $140/mt at the current lire/dollar exchange rate.
Over the last 12 months, global wheat prices have soared, especially in Russia, the source of most of Turkey’s wheat imports. On May 25, 2021, Platts assessed the price of a 25,000 mt cargo of 12.5% protein wheat at $269/mt FOB Novorossiisk, according to data from S&P Global Commodity Insight. It was assessed at $430/mt on May 24, 2022.
The wide gap between TMO’s domestic purchase price and the global price also reflects the weakness of the Turkish lira, which has also depreciated by more than 50% since May 2021.
Commercial wheat prices on Turkey’s domestic market have better reflected those trends, with wheat quoted above Turkish Lira 6,000/mt ($373/mt) on the Turkish Mercantile Exchange on May 25.
“TMO would have to increase the domestic purchase price by more than 120% [from last year] to keep up with the market,” said one wheat trader in Turkey. “I don’t think they’ll do that because it will make more headlines about the real rate of inflation.”
Watch the webinar recording ‘War in Ukraine. Grain & Oilseed Crop Forecast-2022’
The forecast for soybean sowing in the US was lowered, and corn – raised, bu...
Egypt bought wheat at a reduced price, and stock quotes fell by 4-5%
Ukraine started harvesting rapeseed
Importers’ demand for Ukrainian grains
Write to us
Our manager will contact you soon