Russian Grain Exporters Resume Trade with Turkey

Maritime Activity Reports, Inc.

December 24, 2015

Russian grain exporters have resumed deals with Turkish buyers after a short break caused by a deterioration in relations between the two countries, traders and analysts said.
Russia, one of the world's largest wheat exporters, and Turkey, one of the biggest buyers of Russian wheat, have been locked in a dispute since Turkey shot down a Russian warplane near the Syrian-Turkish border in late November.
For several weeks after that, Russian and Turkish traders held back from signing new contracts, fearing Moscow could suspend grain exports to Turkey or Ankara could curb purchases, the traders and analysts said. But no such measures have been imposed and business has returned to normal, they added.
"Concerns over possible supply disruption to the Turkish market, which existed in late November, early December, have not materialised," said Andrey Sizov, managing director of SovEcon agriculture consultancy.
Referring to Turkish buyers, a Moscow-based grain trader said, "We have no problem, they are buying from us." Another Russian trader also said sales to Turkey had resumed, and that there had been no informal restrictions from Moscow so far.
A consultant who advises Turkish grain buyers in Russia, who declined to be named, also said that Turkish traders were now signing new deals with Russian suppliers.
Russian watchdog Rosselkhoznadzor, which oversees grain exports, was not immediately available for comment on Thursday. It said earlier this month that supplies to Turkey were continuing as normal.
Moscow has so far responded to the downing of its plane with restrictions on Turkish food imports and on Russian tourism to Turkey, and has also signalled that it could suspend major infrastructure projects with Ankara.
Russia is an important source of wheat supplies for Turkish flour millers, and a weaker rouble has made Russian grains cheaper for them in dollar-denominated prices.
"Turkey continues buying Russian wheat as the French origin is more expensive, while the Ukrainian origin does not meet their needs in terms of wheat quality," said Arkady Zlochevsky, the head of Russia's Grain Union, a non-government farmers' lobby group.
Ankara imported 1.7 million tonnes of Russian wheat in July-November, making it the second-largest buyer of Russian wheat after Egypt so far in the 2015/16 marketing year, which started on July 1.
Turkey was the largest buyer of Russian wheat in the last marketing year, when it imported 4.1 million tonnes.
Its import needs are lower in general this year, so it will buy less Russian wheat, but the decline will not be caused by the political spat, Zlochevsky said.
(By Polina Devitt)
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