Turkey moves to curb 'high' grain prices

Measures to lower grain prices may seem exaggerated in the current market, where prices for grain growers are already below production costs. Nonetheless, Turkey moves to curb high prices. To reduce domestic prices, the government considers it necessary to release intervention stocks onto the market at reduced prices. The March contract for wheat on the Matif rose yesterday by €2.75 to €190 per tonne. On the CBoT, wheat also went up, gaining 12¾ cents to $5.36 per bushel. Corn also closed in the green, but the increase was more limited at 3½ cents to $4.30. Soybeans closed 7¾ cents higher at $10.75 per bushel. The Turkish state grain agency Toprak Mahsulleri Ofisi (TMO) announced that in February it will bring 3.9 million tonnes of corn, barley, and wheat to the market from strategic reserves. This measure is intended to stabilize domestic prices, ensure the supply of raw materials for pasta and flour producers, and support the affordable production of animal feed amid ongoing economic pressure.Turkish pasta sector plays key roleEspecially the competitive position of the Turkish pasta sector would play an important role. Rising costs could weaken the position of Turkish pasta companies compared to producers from Egypt, Italy, Spain, and Greece, various analysts write. The TMO is bringing 1 million tonnes of durum wheat to the market. According to sources, the price would be approximately $320 per tonne. That is about $15 to $20 below what is paid for durum wheat on the free Turkish market. Compared to international benchmarks, the price is still higher according to some analysts. Looking at the latest tender from Tunisia, the results of which were announced yesterday, it aligns reasonably with the price that TMO is using for durum wheat. Tunisia has secured 100,000 tonnes of durum wheat for $324 per tonne C&F (cost and freight). The North African country also purchased 100,000 tonnes of feed wheat in this tender for $256 per tonne C&F. Uncertainty about American politics In the US, the grain market received support from, among other things, the weaker dollar. In the longer term, there are substantial risks related to the monetary policy of the US under the current president, but for short-term exports, a lower dollar rate is favorable. Possible additional demand for grain and soybeans for use in biofuels is another factor contributing to a positive sentiment. Here, too, it is the American politics that leave the market in uncertainty. In view of the parliamentary elections in November in the US, Trump might be sensitive to calls for additional biofuel blending from agricultural lobby groups. Another factor that is especially relevant on the Chicago exchange is the weather. Earlier this week, several cold records were broken in, among others, Kansas and Texas. Thanks to a layer of snow, most wheat was protected from the worst of the cold, but if we look at the actions of traders on the CBoT, they are not yet convinced that there is no damage. The cold in Eastern Europe, which was also mentioned by the USDA, has less impact on the European market. It is partly logical since it is mainly Russia where the wheat suffers from severe to extreme frost.