INTERVIEW: Turkey’s TUSAF chairman urges wheat supply diversification amid Black Sea shipping risks

Escalating hostilities between Russia and Ukraine since July have demonstrated the importance of not relying on a single country or route, Mehmet Mesut Çakmak, chairman of the Turkish Flour Industrialists' Federation, said in an interview.

"War-risk insurance rates have increased to 2% of a vessel's value, and freight from Ukraine has jumped from $42 to $54/metric ton in a matter of weeks," Çakmak said.

The Platts wheat benchmark, the Milling Wheat Marker, has tumbled 5.7% since July on slack FOB demand and wary shipowners. Turkey's record domestic harvest has insulated its market, even as millers grapple with soaring freight and insurance costs. Platts is part of S&P Global Energy.

Turkish millers are increasingly looking to the Baltic states, Romania and Bulgaria as alternative sources of wheat. While the Black Sea remains the principal supply region, the ability to blend wheat from different origins is a key strength of Turkey's milling sector, Çakmak said.

Millers are responding by managing these risks by matching raw material purchases closely with sales, spreading their purchases, seeking shorter delivery contracts, and embracing flexibility in shipping arrangements. Price volatility extends beyond wheat itself, affecting exchange rates and energy. High financing costs, however, make it impractical to hold large inventories, Çakmak said.

Record harvest provides a buffer

While shipping risks have increased, Turkey's wheat fields have delivered a record harvest. With an estimated 24 million metric tons of wheat produced, thanks to favorable rainfall, the country is better positioned to meet domestic demand and reduce reliance on imports, with this marketing year's estimates at 4 million mt.

However, Çakmak said the final impact on imports will depend on domestic market prices, the Turkish Grain Board's sales policy, and the export performance of flour for the rest of the year.

In the flour market, Turkey aims to reclaim its 3 million mt flour export target for 2026 after shipping 2.345 million mt last year. Early signs, such as a 37% rise in exports in April, are encouraging, alongside a strong recovery in the Syrian market. However, competition is intensifying, especially from Egypt, which benefits from a local currency and competitive prices in key markets, particularly in African and Middle Eastern markets.

Our advantages are quality, reliability and the ability to meet diverse customer needs, Çakmak said. Turkey should also strengthen its presence in sub-Saharan Africa, the Middle East, Asia and Latin America without becoming dependent on any single market for flour exports, Çakmak added.

Turkey lifted its soft wheat export ban after 16 months, signaling confidence in local production and stock levels. Still, with domestic wheat prices above global averages, large-scale exports are unlikely in the short term. Nearby markets like Iraq and Syria are expected to be key buyers, while durum wheat exports to the Mediterranean region remain strong.

Turkey's evolving role

Turkey's role in global wheat markets is changing. With high domestic stocks and reduced import needs, its actions are likely to influence trade flows and prices, particularly for Black Sea exporters.

"Our geographical position controlling access through the Turkish Straits, our advanced milling infrastructure, our ports, and our extensive export network make Turkey more than a price taker in the global wheat market; they make it an important actor capable of influencing regional trade flows," Çakmak said.