April 5, 2017 / 2:47 PM / 6 months ago

Turkish mills buy EU, Black Sea wheat to replace Russian imports

HAMBURG/PARIS, April 5 (Reuters) - Turkish flour mills have covered their short-term needs by purchasing several hundred thousand tonnes of wheat from EU and Black Sea countries, replacing Russian supplies blocked by a change to import rules, millers and traders said on Wednesday.

Turkey has effectively halted purchases from Russia of wheat, maize (corn) and sunflower seeds by removing Russian items from a duty-free import scheme from March 15.

The Turkish move meant Russian supplies facing a prohibitive 130 percent duty, though Ankara has denied banning imports from Russia. Moscow has said the tariffs are hindering relations.

Ankara has not said why it removed Russia from the duty-free scheme, but the Turkish economy ministry has said an improvement in political ties with Russia was “not fully reflected yet in economic relations”, as Russia is yet to restore visa-free travel with Turkey after a previous row.

Relations between the two countries have been strained in recent years and Russia imposed trade restrictions on Turkish goods after Turkey shot down a Russian warplane in November 2015, but Moscow lifted most restrictions as the two countries restored ties in August last year.

Turkey is the second-largest export market for Russian wheat and the disruption to trade has upset millers who use Russian wheat in their flour which is then exported in large volumes.

SHORTFALL COVERED

Turkish millers have since purchased at least 400,000 tonnes and possibly more than 500,000 tonnes of wheat from a number of countries in the east of the EU and the Black Sea region, with shipments mainly due in April, according to millers and traders.

“I think the Turkish millers have basically covered the shortfall following the disruption to the Russian wheat purchases,” one trader said.

Purchases made by Turkish mills since March 15 involve between 200,000 and 300,000 tonnes of wheat from EU Baltic states including Lithuania and Latvia, 50,000 tonnes from Hungary, and approximately 100,000 tonnes to 150,000 tonnes from Ukraine and/or other Black Sea suppliers, traders said.

“The remaining countries on Turkey’s list qualifying for duty-free imports are Lithuania, Ukraine, Kazakhstan, Latvia, Bulgaria, Bosnia Herzegovina, France, Hungary and Canada,” one trader said. “It is logical that the replacement supplies were purchased from the list.”

The purchases are in addition to 130,000 tonnes of EU-origin wheat, which Turkey’s state grains board bought on March 9 and was also thought likely to be largely sourced from the Baltic states.

Attention is now turning to how long Turkey will keep Russian imports off the preferred import programme.

The Russian and Turkish economy ministries plan to hold talks on Russian grain supplies to Turkey in early April, Russia’s deputy economy minister said last week.

“If Russian wheat import restrictions are continued after August, Turkey’s large wheat flour exports will be decreased dramatically,” another trader said. (Editing by David Holmes)

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