Many arable farmers find it hard to imagine taking measures against high grain prices in the current market. However, to lower prices on the domestic market, Turkey is forced to bring intervention stocks onto the market at a reduced rate.
The March wheat contract on the Matif rose yesterday by €2,75 to €190 per tonne. On the CBoT, wheat also rose, gaining 12¾ cents to $5.36 per bushel. Corn also closed higher, but its gain was more limited than wheat's, at 3½ cents to $4.30. Soybeans closed 7¾ cents higher at $10.75 per bushel.
Measures to suppress grain prices. That seems a bit excessive in the current market where prices for arable farmers are below cost. Yet, that is precisely what Turkey intends to do. The Turkish State Grain Agency, Toprak Mahsulleri Ofisi (TMO), announced in February that it would release 3,9 million tons of corn, barley, and wheat from its strategic reserves. This measure is intended to stabilize domestic prices, ensure the raw material supply for pasta and flour producers, and support affordable animal feed production amid ongoing economic pressure.
The competitive position of the Turkish pasta sector, in particular, is said to play a significant role. Rising costs could weaken the position of Turkish pasta companies compared to producers in Egypt, Italy, Spain, and Greece, according to several analysts. TMO is bringing 1 million tons of durum wheat to market. According to sources, the price is estimated at around $320 per ton. This is approximately $15 to $20 below what is paid for durum wheat on the open Turkish market. Compared to international benchmarks, the price is still higher, according to some analysts.
Looking at Tunisia's latest tender, the results of which were announced yesterday, it's fairly in line with the price TMO is using for durum wheat. Tunisia secured 100.000 tons of durum wheat at $324 per ton C&F (carried). The North African country also purchased 100.000 tons of milling wheat in this tender at $256 per ton C&F.
Uncertainty
In the US, the grain market was supported by factors including the weaker dollar. While US monetary policy under the current president carries significant long-term risks, a lower dollar is beneficial for exports in the short term. Potential increased demand for grain and soy for biofuel use is another factor contributing to the positive sentiment. Here too, US policy is keeping the market uncertain. With the November US presidential elections looming, Trump may be sensitive to agricultural lobby groups' calls for additional biofuel blending.
Another factor playing a significant role on the Chicago stock exchange is the weather. Earlier this week, several cold records were broken in Kansas and Texas, among other places. A layer of snow protected most wheat from the worst of the cold, but judging by traders on the CBoT, they're not entirely convinced there's no damage.
The cold in Eastern Europe, which the USDA also briefly mentioned, has less impact on the European market. This is partly logical, as it is primarily Russia where wheat is suffering from severe to very severe frost.