Highlights

Very dry weather in Turkey caused concern after wheat planting was finished, however rain and snow began in the first week of December 2016 throughout Turkey. The Turkish Grain Board (TMO) procured nearly 4.5 MMT of grain in MY 2016/17. Concerns on devaluation of the Turkish Lira will likely impact import decisions. Ministry of Food, Agriculture and Livestock (MinFAL) has revised the basin lists for their national agriculture support program and added corn to some regions, but to save water will encourage drip irrigation systems, and will encourage certified seed usage. With the revised basin list, likely corn production will not decrease as dramatically as originally thought.

PRODUCTION

Wheat

Total wheat production is forecast at 17.25 MMT in MY 2016/17, down about 11 percent compared to previous marketing years. This is due to serious drought in Central Anatolia. After the wheat planting finished, very dry weather in Central Anatolia, and the GAP region (Southeast) caused concern, however rain and snow began falling in the first week of December throughout Turkey. Some farmers still lost some of their wheat seed during this dry period, but this situation will not affect overall wheat production much.State Waterworks Authority (DSI) data states that the average cumulative precipitation between October 1 and December 31, 2016 decreased 25.9 percent compared to the long term average, but increased 7.7 percent when compared to previous year's average. Farmers are optimistic for the upcoming harvest while their planted areas are resting under the snow now. Certified seed use is expected to increase due to the government's encouragement to use it.

Barley

Central Anatolia produced more than half of Turkey's barley crop. After a drought year, harvest was weak, as traditionally farmers plant barley in unirrigated areas. Post maintains production estimate at 4.75 MMT in the marketing year 2016/17.Barley planting is finished across the country, and planted area is expected to increase from last year because of high prices – it is up about 25 percent compared to last year.

Corn

Total corn production is forecast at 5.5 MMT in MY 2016/17. The second crop corn harvest is completed in almost all regions. Second crop corn yields were close to expectations. In the southeast of Turkey, where most of the second crop corn was harvested with 900,000 MT of corn, yields were around 900-1,000 MT/ha. In the Cukurova region, yields were around 700 MT/ha, compared to 700-850 MT/ha in a normal season. In the Aegean growing region, such as the area around Aydin, second crop yields were around 800-850 MT/ha, similar with the long term yield average.

Rice

The rice production area in Turkey in MY 2016/17 has not changed compared to the previous year. Rice harvest began in the Thrace region in the first week of September in 2016. All of Turkey's paddy rice harvest was completed by November 2016 in all regions. Post maintains production estimate at 500,000 MT of milled rice in marketing year 2016/17.

TRADE

The Turkish Lira that has lost over 25 percent against the U.S. dollar in the last three months. The rapid devaluation of the currency is affecting many parts of the economy, but particularly with regard to imported goods. As seen from the chart below, although all commodities' prices are nominally increased in the domestic market, the increase in domestic prices is still less than the currency losses. It is expected that for all grain under these economic circumstance, market players may hesitate to take a strong position.MY 2016/17 is another marketing year in which TMO has been very active after harvest. TMO procured about 4.5 MMT of grain in MY 2016/17, of which about 2.6 MMT was wheat, 1.8 MMT corn, and 77,000 MT paddy rice.

Post maintains import forecast at 5 MMT of wheat in marketing year 2016/17. Stable wheat products exports, as well as a lack of high quality wheat in the domestic market are the driving forces of the import demand in Turkey. Total wheat imports during MY 2015/16 were 4.3 MMT, down about 25 percent compared to previous marketing years, due to a record harvest. Turkey has imported about 2.2 MMT of wheat during the first six months of MY 2016/17, of which about 500,000 MT was durum wheat. Russia was the main supplier with 1.3 MMT. Mexico (283,000 MT), Canada (116,000 MT) and Kazakhstan (55,000 MT) were the other leading suppliers.TMO issued a series of international tenders to purchase a total of 99,000 tons of wheat to be sourced from the European Union (EU). Therefore, 99,000 MT of high quality wheat, with a minimum 14 percent protein, will be bought under a zero tariff quota through a tender on January 13, 2017. TMO plans to sell this imported wheat to Turkish wheat processors in the port. According to market sources, despite a decent size wheat crop in Turkey, there is not a sufficient supply of high quality milling wheat. Russia has also had problems with quality, so because of this, Turkey is turning to the EU.

The Turkish Grain Board (TMO) announced 2016 paddy rice procurement price on October 7, 2016 at 1,675 TL/Ton for Osmancik variety. It was 1,580 TL/Ton last year. TMO has bought 77,000 Ton of paddy rice since the price announcement.Total wheat product exports are forecast to remain at 5.6 MMT, assuming strong demand from major consumers continues. Turkey exported 1.8 MMT of wheat flour in the first six months of MY 2016/17, up 17 % from a year before. Meanwhile, Turkey exported 440,000 MT of pasta during the same period, up 26% from a year before. Turkey could be on track for another record year for wheat products exports.Corn consumption estimation was 6.55 MMT in MY 2015/16, due to decreasing demand from feed sector. The demand was possibly affected by availability of cheap feed wheat after a record harvest, availability of other corn co-products, and slowdown of poultry export. Post has revised the corn consumption forecast to 6.95 MMT due to weak demand from the feed sector. Increase in usage of alternative feed items in the rations also affects usage.

Total corn imports during MY 2015/16 were 567,000 MT, which were very limited compared to the previous year. Record domestic corn harvest, governmental restrictions on imports, TMO's sales, abundant feed wheat and a decrease in poultry product exports were the main reasons for import shrinkage. Russia became the leading corn supplier with 402,000 MT, followed by Romania with 92,000 MT in MY 2015/16. Post revised the import forecast to 1 MMT of corn in marketing year 2016/17 due to unstable currency, TMO's strong sales, unstable feed sector demand and a reduced tendency by the private sector to want to grow their stocks in an uncertain economic environment. Turkey may face a corn shortage in the last quarter of the marketing year. It is expected that the private sector will meet its corn needs by sourcing from TMO's large stocks instead of importing, at least until those stocks are gone. Compared to last year, the private sector is reluctant to buy corn after the harvest. TMO procured 1.7 MMT of corn after harvest in MY 2016/17 and now has very large corn stocks.

Post also revised the ending stock forecast at 312,000 MT of corn in MY 2016/17 as TMO is trying to melt down its stocks. The private sector is reluctant to tie up too much in stocks, especially with the unstable currency situation, when TMO will likely be the low cost supplier for the near future.

Turkey imported 218,000 MT of milled equivalent basis rice in MY 2015/16. Turkey imported 193,000 MT of rough rice in MY 2015/16, of which 71,700 MT was from the United States and 67,400 MT from Russia. Turkey also imported 72,383 MT of milled rice in MY 2015/16. Main suppliers were Italy, India and Greece with 23,600 MT, 20,600 MT and 15,000 MT respectively. So far, according to American exporters, the United States has exported 17,192 MT of milled rice and 57,514 MT of rough rice to Turkey in MY 2016/17.

Turkey exported about 42,000 MT of milled rice during the same period. Iraq (19,700 MT), Syria (7,400 MT), and Libya (3,700 MT) were the main destinations. In addition, Turkey is continuing to be a hub between supplier countries and the Middle East, and according to exporter reports, it is estimated that roughly 300,000 MT of rice are being transshipped through Turkey.

During the harvest time, Osmancik variety paddy rice was worth about 1,675 TL/Ton in the domestic bulk market. But due to recent appreciation of U.S. dollar against the Turkish Lira, and increasing domestic demand, prices are about 1,950-2,000 TL/Ton currently. Also TMO announced they will sell paddy rice to the millers at between 1140- 1,980 TL/Ton, depending on variety, as of January 1, 2017.

POLICY

Post issued a report on New Turkish Agricultural Policy in November 2016, which covered projected impacts of the announced new agriculture support policy. Turkey will be divided into 941 agricultural basins based on climate and soil to subsidize 19 strategic crops, with a specific set of crops for each basin. Subsidies will be available for crops if they are on the subsidy list. According to analysis on the original policy which had been announced, it was expected that planting area of corn would decrease. The goal had been to reduce planted area of corn in drought prone regions and conserve water, but farmers who had been growing corn in those regions weren't pleased that corn wasn't on the list for their basin and that they wouldn't be able to receive subsidies.

The Turkish government has since changed the basin list for some parts of Konya, Mardin and Sanliurfa and corn re-entered the subsidy list, under the condition that farmers have to use drip irrigation systems to be able to get subsidies.

It was originally anticipated that corn planting area would decrease in the coming year due to the initial policy, but now market sources are not sure what will happen, though they agree that production will not decrease as dramatically as they originally thought. Certified seed use is expected to increase due to the government's encouragement for farmers to use it.

Wheat

2014/2015

2015/2016

2016/2017

Market Begin Year

Turkey

Jun 2014

May 2015

Jun 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

7710

7710

7860

7860

7815

7815

Beginning Stocks

3112

3112

2750

2750

3098

3098

Production

15250

15250

19500

19500

17500

17250

MY Imports

5947

5947

4382

4382

5000

5000

TY Imports

5960

5960

4396

4396

5000

5000

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

24309

24309

26632

26632

25598

25348

MY Exports

4059

4059

5534

5534

5600

5600

TY Exports

4134

4136

5609

5609

5600

5600

Feed and Residual

700

700

1200

1200

1000

1000

FSI Consumption

16800

16800

16800

16800

16800

16800

Total Consumption

17500

17500

18000

18000

17800

17800

Ending Stocks

2750

2750

3098

3098

2198

1948

Total Distribution

24309

24309

26632

26632

25598

25348

Barley

2014/2015

2015/2016

2016/2017

Market Begin Year

Turkey

Jun 2014

May 2015

Jun 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

3400

3400

3400

3400

3400

3400

Beginning Stocks

899

899

332

332

961

961

Production

4000

4000

7400

7400

4750

4750

MY Imports

792

792

129

129

300

300

TY Imports

332

332

146

146

300

300

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

5691

5691

7861

7861

6011

6011

MY Exports

9

9

0

1

25

25

TY Exports

4

10

0

1

25

25

Feed and Residual

4500

4500

6000

6000

4600

4600

FSI Consumption

850

850

900

900

900

900

Total Consumption

5350

5350

6900

6900

5500

5500

Ending Stocks

332

332

961

961

486

486

Total Distribution

5691

5691

7861

7861

6011

6011

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

Turkey

Sep 2014

Sep 2015

Sep 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

550

550

620

620

570

570

Beginning Stocks

644

644

712

712

562

862

Production

4800

4800

6200

6200

5500

5500

MY Imports

2364

2364

567

567

1500

1000

TY Imports

2377

2377

567

567

1500

1000

TY Imp. from U.S.

13

13

3

3

0

0

Total Supply

7808

7808

7479

7479

7562

7362

MY Exports

46

46

67

67

100

100

TY Exports

66

66

51

51

100

100

Feed and Residual

6000

6000

5800

5500

6000

5900

FSI Consumption

1050

1050

1050

1050

1050

1050

Total Consumption

7050

7050

6850

6550

7050

6950

Ending Stocks

712

712

562

862

412

312

Total Distribution

7808

7808

7479

7612

7562

7362

Rice, Milled

2014/2015

2015/2016

2016/2017

Market Begin Year

Sep 2014

Sep 2015

Sep 2016

Turkey

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

95

95

98

98

98

98

Beginning Stocks

245

245

217

217

127

127

Milled Production

460

460

500

500

500

500

Rough Production

687

687

746

746

746

746

Milling Rate (.9999)

6700

6700

6700

6700

6700

6700

MY Imports

317

317

218

218

300

300

TY Imports

256

256

225

225

300

300

TY Imp. from U.S.

133

133

0

0

0

0

Total Supply

1022

1022

967

967

927

927

MY Exports

25

25

50

50

25

25

TY Exports

28

28

50

50

25

25

Consumption and Residual

780

780

790

790

780

780

Ending Stocks

217

217

127

127

122

122

Total Distribution

1022

1022

967

967

927

927