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Summary
After a 40% drop in wheat imports during the first half of the 2024-25 marketing year, Turkiye is poised to increase its import activity following the partial reinstatement of the inward processing regime (IPR). With domestic wheat prices significantly higher than imported Russian wheat, Turkish flour exporters are seeking more flexibility to remain competitive in global markets, particularly in Africa and the Middle East.
Market Dynamics Shifting for Turkish Wheat Trade
Turkiye is expected to accelerate wheat imports for the current marketing year (June 2024-May 2025) following a significant 40% decline in shipments during the first half of the season. Import volumes fell to 1.9 million tonnes during June-November 2024, primarily due to Ankara's suspension of the inward processing regime (IPR) for wheat from late June until mid-October.
With Turkiye now partially reinstating the IPR, industry analysts project that imports will gain momentum and potentially exceed 5.5 million tonnes by the end of the marketing year. Russia is anticipated to be the primary source for these imports.
Regulatory Framework and Trade Conditions
The Turkish Grain Board (TMO) initially implemented strict regulations requiring millers to purchase 85% of their wheat requirements directly from TMO stocks, with only 15% allowed through IPR imports. This restrictive framework has recently been adjusted, reducing mandatory TMO purchases to 75% and increasing IPR allowances to 25%.
Industry stakeholders in Turkiye expect this revised regulatory framework to remain in place until the marketing year concludes in May 2025. However, the flour industry is advocating for a more balanced 50-50 arrangement, arguing that such flexibility is essential to maintain competitiveness in export markets.
The price differential between domestic and imported wheat underscores this concern, with Russian wheat landing approximately $70 per tonne cheaper than Turkish wheat, which currently trades around $310 per tonne.
Export Projections and Market Recovery
Despite these challenges, the U.S. Department of Agriculture forecasts Turkiye's wheat exports at 7 million tonnes for the current marketing year. Turkish flour mills are optimistic about reclaiming market share in Africa and the Middle East, with particular focus on Iraq, which has traditionally been a significant market.
In June 2024, the Turkish government permitted exports of domestic wheat to relieve overflowing granaries. While Ankara successfully exported 1 million tonnes of durum wheat, milling wheat exports have been hampered by uncompetitive pricing in global markets.
Consequently, Turkish flour exports have decreased by 40% to 1.2 million tonnes (equivalent to 1.7 million tonnes of wheat), with Iraq, Syria, and Somalia serving as the main destination markets. Industry experts anticipate export activity to increase in the coming months with the partial restoration of the IPR, with Syria potentially emerging as a key buyer of Turkish flour.
Production and Stock Levels
For the 2024-25 marketing year, Turkiye's wheat production is estimated at 19 million tonnes, down from 21 million tonnes in 2023-24, primarily due to extended dry periods affecting crop yields. Ending stocks are projected to decrease significantly to 2.8 million tonnes, compared to 5.6 million tonnes in the previous marketing year.
Conclusion
Turkiye's wheat market is navigating a complex transition as it balances domestic supply management with export ambitions. The partial reinstatement of the IPR represents a calculated compromise intended to support both domestic wheat producers and flour exporters. For global commodity traders and food manufacturers, these developments signal potential shifts in regional wheat and flour trade flows, with implications for pricing and supply chain management across the Middle East and North Africa. As Turkiye works to regain its position in export markets while managing domestic stockpiles, market participants should closely monitor regulatory adjustments and their impact on regional trade dynamics.