Turkey looking to trim large wheat inventories

Despite a projected 2-million-tonne year-on-year decline in production, Turkey still has large inventories of wheat that it is trying to liquidate, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.

With wheat ending stocks reaching a record 5.3 million tonnes at the end of the 2023-24 marketing year, the Turkish government announced in June that it was suspending wheat imports through Oct. 15 to attempt to drawdown the oversupply. But the FAS noted that because of the wide price difference between Turkish and imported wheat ($320/tonne vs. $240/tonne) during the suspension, flour and pasta exporters were reluctant to use local wheat and instead opted to wait for imports to resume.

At the end of the suspension two weeks ago, the Turkish Grain Board (TMO) notified millers that they could import 15% of their wheat needs in exchange for purchasing 85% of their wheat from the TMO.

“According to market sources, this practice will likely continue through the end of 2024,” the FAS said. “TMO is reportedly selling its stocks below domestic wheat prices and in line with international prices at around $235 to $245 per tonne. Selling at a discount appears to be a departure from the government’s commitment earlier this year to stop selling below cost in order to conserve government resources. However, it now appears that the government has realized that it must sell its wheat stocks at a discount if it ever hopes to melt down its massive inventories.”

The FAS said Turkey is having difficulties exporting wheat “because of the restrictions on imports, expected difficulties recovering lost market share, and as slowdown in Iraq’s demand for Turkish flour.” The agency sees exports declining to 7 million tonnes this year, a 30% decline from the 2023-24 total.

Despite these factors, the FAS forecasts a 43% year-on-year decline in ending stocks for 2024-25 to 3 million tonnes.

Turkish wheat production is projected to decline by 11% from last year’s record output to 18.7 million tonnes “due to dry weather conditions during the spring growing season,” the FAS said.