Report Highlights:

Corn production forecast is 6 MMT in marketing year (MY) 2015. The Turkish Grain Board (TMO) was a very active player in the market in MY 2015. TMO procured nearly 4 MMT grain after a record production for wheat, barley and corn. TMO opened its stock for export certificate holders who are flour, pasta, biscuits, feed and poultry exporters under the Inward Processing Regime (IPR) in mid-September. The price of milling wheat was 161-178 USD/MT, which is competitive with the world price. The paddy rice harvest is almost finished; Posts forecasts 500,000 MT production.

PRODUCTION

Wheat

All of Turkey's wheat harvest has been completed and Post estımates MY2015 production at 19.5 MT. Despite record yields, the overall quality of the crop was low. The quality was better in the GAP region and in the lower part of Central Anatolia.

Wheat planting will start in the first week of November in the Cukurova region. Farmers in the Cukurova region are uncertain whether to plant wheat or oilseed crops. Also nut prices are very attractive for farmers in irrigated areas.

Wheat yield in the Anatolian region was very high when compared to last year's low yield due to drought and also to the long term average yield. The MY 2015 harvest is characterized by low quality in terms of protein, but also in high yields. In the Polatli region, the dry land yield was 400 kg/da; for irrigated land it was 600 kg/da. In the Konya region the dry land yield was 350 kg/da and the irrigated land yield was 650 kg/da. Overall, the Anatolia region yield was around 450-500g kg/da.

Corn

The first crop of corn is almost completed and the second crop corn harvest has begun in some regions. Posts forecasts 6 MMT production. Yield increased in central Anatolia and GAP region despite lower than expected yields in Cukurova region. The first crop corn harvest started in the middle of August in the Cukurova region and in some parts of the region yields are less than expected. The average yield in the Ceyhan region was 1.3-1.4 MT/ha, despite being 1.5 in previous years, and for other areas was 1.2 MT/ha. Planting area increased in central Anatolia, especially new irrigated area in Konya where farmers enjoyed high yields.

The first crop of the corn harvest is almost completed (95%), but continues in Konya and high altitude regions. Despite a good start due to rainy spring, lack of rains and extreme heat in the summer months adversely affected yields. The second crop of the corn harvest has started in Cukurova and in the South East Anatolian region. The second crop corn yield is at 0.8 MT/ha in Cukurova and 0.95 MT in the south east of Turkey, which is the same as last year.

Rice

Rice planting finished by the end of May despite heavy rainfall. The MY 2015 planted area increased due to sufficient water levels in several dams compared to last year. Additionally rice prices were attractive to farmers during planting period. The paddy rice harvest is almost finished. Post forecasts rice production at 500,000 MT.

Edirne, Gonen, Manyas and Kizilirmak Delta are the main regions in term of rice production.

Edirne region produces more than 50 percent of country's paddy rice production. Harvest started in the second week of September. But rainy weather conditions caused interruption in harvest in early October. Paddy rice area increased by 20 percent due to last year's high price and increased water levels in dams which feed rice fields in Kesan and Hayrabolu regions. The yields in Ipsala reached 700 kg for Osmancik variety, which are similar level in comparison with last year. But some farmers trying other varieties in that region saw higher yields, at around 850 kg/da. In general, overall milling rates are 60 percent, which are similar to the long term average.

Paddy rice area increased 25 percent due to increased water level in dam in Manyas region. In gonen region and Manyas region, yield is similar to last year. 6500 Ha area will be harvested in Manyas region, where there is some concern regarding quality of Baldo varieties because of the Pyricularia oryzae C,is a common fungus preventing plant development. Harvest started in the second week of September in Kizilirmak Delta. Corum and Cankiri Regions produce more than 20 percent of country's paddy rice production. Although harvested area increased compared to last year, yields are lower than expected, at around 550 kg, which is under the long term average of 600 to 700 kg/da. Heavy rain in spring coupled with drought in summer negatively affected the yields especially in Boyabat where 2,500 Ha area harvested and milling rates are 40 percent. Yield is lower than expected at around 600 kg due to temperature differences in Cankiri. Osmancik 97 is the major variety in the Corum region, which produces about 5 percent of country's paddy rice production. Yield is lower than expected there, at around 600 kg, which were at 700 to 800 Kg/Da last year, due to adverse weather conditions. Deficiency in modern storage and drying units at the farm level are still structural problems in those regions.

TRADE

Turkish Grain Board (TMO) was a very active player at the market in MY 2015. TMO had purchased more than 4 MMT of grain at the start of the MY 2015 harvest in June which has been the highest procurement since 2009. Due to high yields in wheat, barley, and corn, market prices were low, which led farmers to sell their product to TMO. Compared to last year, there was more low quality wheat produced, which usually leads TMO to support purchase of large quantities. TMO announced a wheat price (862 TL/MT for milling wheat and 976 TL/MT for durum wheat) and barley price 645 TL/Ton on July 16, 2015 and corn price (725 TL/MT) on September 3, 2015. These prices were just over the market prices. As of October, TMO had purchased 565,000 MT of Durum Wheat, 2.7 MMT of Milling Wheat, 470,000 MT of Barley and 300,000 MT of Corn. 1.3 MMT of the total wheat purchased was low quality and will be used for feed sector (as of October 15, 2015, US$ 1=TL 2.92).

Wheat import to Turkey is only feasible under the Turkish Government's inward process regime (IPR). Outside of this regime, traders must pay a 130% customs tax on wheat imports. The IPR helps flour millers be competitive in the wheat flour export market. Under the regime, exporters of wheat products, such as wheat flour and pasta, are eligible to receive special import licenses when they export wheat products. The license currently can be traded for 100 USD/MT in the market. The price of Russian 12.5% protein wheat C&F is 200 USD/MT as of October 15, 2015.

TMO announced they will sell milling wheat and durum wheat in stocks for Export Certificate holders who are flour, pasta, biscuits, feed and poultry exporters under IPR in the second part of September. The price of milling wheat was 161-178 USD/MT, which was a very competitive price compared to the world price. According to market sources, TMO sold more than 500,000 MT wheat to exporters between September 15 and October 20, 2015. Traders hesitated to import wheat after TMO's announcement of such a low selling price of domestic Turkish wheat and waited for TMO to sell out of its stocks.

Despite all the current logistical problems in Turkey, especially in Iraq and Syria border areas, the Turkish flour sector achieved to maintain the previous year's performance. Exporters lost market share in Indonesia and Philippines but compensated for it in Sudan, Angola and Yemen. Pasta exporters have tried to gain new markets in Africa with the help of new amendment to the Inward Processing Regime. This amendment allows them to import milling wheat (up to 30% of the product) to blend with durum wheat for a lower-quality and price competitive pasta which can only be sold for export to countries in Africa. Exporters are hopeful for stronger exports in MY 2015 because of the record harvest in wheat. It is expected that Turkey will import 3.8 MMT of high quality wheat, which corresponds with a similar increase in export of wheat products.

Corn imports were about 2.2 MMT in MY 2014, higher than the previous year due to strong demand from the feed sector and drought damage to the local alternatives like barley and wheat. But in MY2015 some demand for corn will be shifted to local abundant alternatives like low quality local wheat and barley.

Just before the harvest began, farmers and traders realized that there would be record production, and in August the price started to decrease from 710 TL/MT to 660 TL/MT. TMO announced the corn procurement price of 725 TL/MT on September 3, 2015 and the price stabilized. Some farmers who had to sell their corn in August to traders in Cukurova region criticized the government for the late announcement. Feed sector did not seem as eager to buy as much corn as they did last year. (As of 15 October US$ 1=TL 2.92)

Overall production of livestock and poultry meat went up during MY 2014, while egg production fluctuated due to avian influenza epidemic. An Iraqi import ban on Turkish poultry meat, poultry meat products, and eggs was lifted in August. Exports are continuing despite the difficulties in logistics due to political problems and instability in the border areas of Syria and Iraq.

According to market rumors, current political uncertainties, ongoing biotech problems that limit market access and sales, along with rising country risk, are discouraging private investors. As a result, one of the biggest foreign players in Turkey decided to shut down its commodity trading section in October. It is unclear how this will impact the market, but it is the latest sign of the difficulty and unpredictability of doing business in Turkey with the current regulatory environment.

Paddy rice price had been 1,700-2,100 TL/Ton last year which was very attractive for rice farmers during the planting period. But farmers were not happy at the beginning of harvest when the price dropped to 1650 TL/Ton for Osmancik varieties, which have 60 percent milling rate. Macroeconomic concerns and the upcoming general election have caused hesitation and traders have not appeared to be willing to purchase new harvest domestic rice. Total imports of paddy rice in MY2014 are 250,945 MT. Main paddy rice suppliers are Russia (106,000), United States (100,000), Portugal (13,000). Compared to last year, Russian rice is playing a stronger role in the market with the help of price, logistical, and customs inspection advantage.

Total imports of milled rice in MY2014 are 138,941 MT. India, Italy and Greece are the main milled rice suppliers with 61,000MT, 34,000 MT, 7,000 MT respectively. Despite quality debates, India is still considered the best supplier by Turkish importers.

Rice Trade

Turkey: MY 2014, Rice Imports (converted to milled equivalent)

Countries

MT

Russia

74,538

United States

71,820

India

61,233

Italy

35,929

Greece

15,333

Other

58,683

Total

317,536

Although some farmers wish for government intervention on rice price, it is highly unlikely that TMO will announce a procurement price for paddy rice. TMO has 26,000 MT paddy rice and 7,000 MT rice in its stock. TMO sells Osmancik and Calrose varieties at 2.90 TL/Kg and Baldo varietiy at 4 TL/Kg at its retail sale points.

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Jun 2013

Jun 2014

Jun 2015

Turkey

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

7,700

7,700

7,710

7,710

7,860

7,860

Beginning Stocks

2,295

2,295

2,889

2,889

2,524

2,524

Production

18,750

18,750

15,250

15,250

19,500

19,500

MY Imports

4,035

4,035

5.947

5.947

3,800

3,800

TY Imports

4,154

4,154

5,960

5,960

3,800

3,800

TY Imp. from U.S.

15

15

0

0

0

0

Total Supply

25,080

25,080

24,086

24,086

25,824

25,824

MY Exports

4,441

4,441

4,062

4,062

4,000

4,000

TY Exports

4,294

4,294

4,136

4,136

4,000

4,000

Feed and Residual

950

950

700

700

1,200

1,200

FSI Consumption

16,800

16,800

16,800

16,800

16,800

16,800

Total Consumption

17,750

17,750

17,500

17,500

18,000

18,000

Ending Stocks

2,889

2,889

2,524

2,524

3,824

3,824

Total Distribution

25,080

25,080

25,086

25,086

25,824

25,824

1000 HA, 1000 MT, MT/HA

Barley

2013/2014

2014/2015

2015/2016

Market Begin Year

Jun 2013

Jun 2014

Jun 2015

Turkey

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

3,330

3,330

3,400

3,400

3,400

3,400

Beginning Stocks

469

469

899

899

332

332

Production

7,300

7,300

4,000

4,000

7,400

7,400

MY Imports

86

86

792

792

50

50

TY Imports

596

596

300

300

50

50

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

7,855

7,855

5691

5691

7,782

7,782

MY Exports

6

6

9

9

25

25

TY Exports

9

9

10

10

25

25

Feed and Residual

6,000

6,000

4,500

4,500

6,000

6,000

FSI Consumption

950

950

850

850

900

900

Total Consumption

6,950

6,950

5,350

5,350

6,900

6,900

Ending Stocks

899

899

332

332

857

857

Total Distribution

7,855

7,855

5,691

5,691

7,782

7,782

1000 HA, 1000 MT, MT/HA

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Sep 2013

Sep 2014

Sep 2015

Turkey

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

580

580

550

550

620

620

Beginning Stocks

291

291

642

642

542

542

Production

5,100

5,100

4,800

4,800

6000

6000

MY Imports

1,304

1,304

2200

2200

900

900

TY Imports

1,381

1,381

2200

2200

900

900

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

6,695

6,695

7642

7642

7442

7442

MY Exports

253

253

50

50

200

200

TY Exports

252

252

50

50

200

200

Feed and Residual

4,800

4,800

6000

6000

5500

5500

FSI Consumption

1,000

1,000

1,050

1,050

1050

1050

Total Consumption

5,800

5,800

7050

7050

6550

6550

Ending Stocks

642

642

542

542

692

692

Total Distribution

6,695

6,695

7642

7642

7442

7442

1000 HA, 1000 MT, MT/HA

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

Sep 2013

Sep 2014

Sep 2015

Turkey

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

98

98

95

95

98

98

Beginning Stocks

194

194

245

245

220

220

Milled Production

500

500

460

460

500

500

Rough Production

746

746

687

687

746

746

Milling Rate (.9999)

6,700

6,700

6,700

6,700

6,700

6,700

MY Imports

341

341

320

320

350

350

TY Imports

400

400

300

300

350

350

TY Imp. from U.S.

225

225

0

75

0

25

Total Supply

1,035

1,035

1,025

1,025

1,070

1,070

MY Exports

20

20

25

25

30

30

TY Exports

20

20

20

20

30

30

Consumption and Residual

770

770

780

780

780

780

Ending Stocks

245

245

220

220

260

260

Total Distribution

1,035

1,035

1,025

1,025

1,070

1,070

1000 HA, 1000 MT, MT/HA