FEATURE: Turkey's wheat and corn imports fall as import policies changes unfold

Turkey is a significant importer of wheat and corn, particularly from the Black Sea region. For the 2024-25 season, wheat imports are projected at 6.5 million mt, mainly from Russia, while corn imports are expected to reach 2.1 million mt, primarily from Ukraine, a decline from last season's estimates driven by the government's revised import policies aimed at supporting local wheat production and promoting corn imports, ensuring a sufficient supply of grains in the domestic market at competitive prices.

Wheat import policy changes and market trends

Turkey is one of the largest wheat importers. It is projected to import 6.5 million mt for the 2024-2025 season, with Russia supplying 1.56 million mt so far. However, imports are expected to fall by 31% largely due to a new strategy by the Ministry of Agriculture and Forestry to support domestic farmers, with local production forecasted at 19 million mt, down 2 million mt year-on-year, according to the USDA.

The government halted wheat imports from June 21 to Oct. 15. Afterward, a quota system was introduced, allowing buyers to purchase either 85% or 100% of their wheat from the stocks managed by the government's grain board, TMO. Those opting for 85% must fulfil this quota through TMO before importing the remaining 15% from global markets. This system will remain in effect until Dec. 31.

Most traders said the new rules will not notably boost imports, with many expecting Turkey to return to the global market next year if restrictions are eased. Currently, most millers will continue purchasing from TMO stocks, while some find the 85-15 ratio too high. For November, TMO wheat ex-warehouse sales prices vary based on quality, location, and storage type, ranging from $220 to $270/mt. Millers said there is little likelihood for these prices to change in the near term.

"We will keep buying our wheat from TMO," a miller said.

"It all depends on TMO's selling performance, if they sell enough, they may change the quota, but it is early to say now," another miller said.

"The quota kills demand for new purchases of import and pushes the market toward TMO," a buyer said.

"TMO has a lot of wheat stocks so they can sell their stocks faster in this way," another buyer said.

Currently, between 650,000 and 1 million mt of wheat are stored in bonded warehouses. The local demand from the Turkish market, along with requests from Iraqi and Syrian customers, is approximately 550,000 mt. "In the short time we don't expect an increase in CIF demand," another buyer said.

State grain boards in the Middle East and North Africa are crucial for importing wheat to keep bread, a staple product, affordable, making them some of the largest wheat buyers globally. In Istanbul, the price for 200 grams of Somun ekmek is TL 6.5 ($0.95/kg). TMO, accounted for 33% of the country's wheat imports in the 2022-23 marketing year but made no purchases via tenders in 2023-24, reportedly acquiring only 3.7% through government agreements. As a result, Turkey heavily relies on private imports and its private milling and baking sectors.

Initial concerns regarding the quality of TMO wheat stocks have diminished as sales continued. "We buy good quality wheat from TMO," one miller noted, reporting positive flour sales. Another miller added, "Depending on the warehouses, we have enough good quality in the nearest silo." Wheat flour exports from January to September 2024 year amounted to 2.47 million mt, down 229,000 mt year on year, traders said. Total exports in 2023 amounted to 3.7 million mt, and 3 million mt the year before.

Platts, part of S&P Global Commodity Insights, assessed the CIF Marmara Turkey 12.5% protein wheat market at $220/mt on Nov. 11, down 1.35% week on week.

Corn import policy changes and market trends

Turkey is also a leading importer of corn globally, importing 3.2 million mt (January-September), up from 1.9 million mt year-on-year and of which 1.6 million mt came from Ukraine, representing over 50% of Turkey's total corn imports, according to Commodity Insights data. Turkey's corn production is estimated at 7 million mt for 2024, down 1.4 million mt from last year, according to USDA. Domestic consumption is forecasted at 8.4 million mt, largely driven by the animal feed industry.

The government reduced the import duty on corn from 130% to 5% for 1 million mt from Oct. 10 to Dec. 31. This policy aims to meet domestic demand, particularly in light of reduced production prospects for the marketing year 2024-25. The lower import duty has stimulated demand, with numerous importers taking advantage of the reduced tariff to secure cargo. However, with the new crop expected to reach the market in November, domestic prices fell, prompting exporters to lower their offers despite the reduced tariff. Following a surge in interest, export prices in the Turkish market declined to remain competitive with domestic prices. A Turkish importer noted a drop of $15-$17/mt in domestic prices, while another source indicated that prices continued to fall after the import tax reduction.

In the early days of Ukraine's new season crop, which started in October, prices initially rose due to strong demand from Turkey, leading to a 16-month high for Black Sea corn. However, prices began to fall, as the local market weakened its prices, promoting low export demand for Ukraine corn into Turkey. Buying interest fell from $239/mt to $232/mt week on week, subsequently, the price of Ukraine corn also fell from $222/mt to $216/mt in the same period. A local buyer said, "Prices went up too quickly and are now falling just as fast," emphasizing the volatility in the market. As demand and prices in Turkey declined, the Ukrainian market remained at the lower end.

Traders said they anticipate the government to consider extending the lower import tariff into early 2025, given the ongoing demand for corn in the country. Another buyer said, "This is not officially confirmed, but [we're] hearing rumors in this respect."

The recent spread of bird flu in several provinces has led to increased slaughter of chickens and has affected the production of poultry, according to local media reports. However, traders noted that the effect on demand and price of corn was low. "Prices have not been very affected; the interest in corn demand continues at similar levels."

Platts assessed Ukrainian corn FOB POC at $213/mt on Nov. 11, down 1.39% week on week.