Turkey may extend its ban on wheat imports amid a good harvest and large stocks

According to forecasts of the TurkStat Institute, Turkey can harvest 21 million tons of wheat in 2024/25, which will be 4.5% less than the previous season. Currently, the quality of wheat is very good in most regions.

Wheat stocks in the country, according to the IGC, amount to 8.1 million tons, which is 1.5 million tons lower than last year's level, but significantly higher than the average.

Amidst high production and stocks, the state agency TMO is buying wheat at low prices, which does not sit well with farmers who are facing 75% inflation. In order to correct the situation, the Turkish authorities introduced a ban on the import of wheat from June 6. Domestic market participants believe that the ban will be extended until the end of 2024, but this will depend on wheat stocks and quality.

The market reacted to the ban on imports by lowering prices, in particular the cost of freight in the Sea of Azov and the Sea of Marmara, where there were active deliveries of wheat from the Russian Federation. Thus, freight rates for cabotage transportation of wheat from the Russian Federation to Turkey decreased from $28-30/t to $13/t.

After the introduction of the ban by Turkey, Russia will have to look for new sales markets for its wheat. It is likely to increase supplies to Egypt, Syria and other North African countries, which will increase competition with Ukraine, which also exports wheat to these markets.

Currently, the market is waiting for the meeting between the presidents of Turkey and the Russian Federation, which will be held in Astana on July 3-4, since the Russian Federation will ask for an exception to the ban on wheat imports in order to continue supplies to Turkey.

According to broker Kronmark Turkey, TMO does not yet plan to hold an international tender for the purchase of wheat against the background of significant stocks in the country. Therefore, further purchases will be determined by the demand for wheat.