Marking its 20th anniversary, the Turkish Flour Industrialists’ Federation (TFIF) orchestrated a momentous gathering, assembling over 1300 delegates at its 18th International Congress and Exhibition in Antalya. Addressing the congress, Haluk Tezcan, the Chairman of the TFIF Board, proudly announced that in 2023, they achieved an unprecedented milestone by exporting over 3.6 million tons to 166 countries and 6 free trade zones. He emphasized that this is the highest export of all time. Furthermore, he outlined ambitious goals, stating that the export target for 2024 has been set at an impressive 4 million tons. 

Turkish Flour Industrialists’ Federation (TFIF), which gathers the companies serving in the flour industry in Turkey under a single roof, held the 18th of its annual international congress and exhibition in Antalya between 15-18 February 2024. With more than 300 members and 8 regional associations, TFIF, which has been the global export leader in the flour industry for the last 10 years, organized the congress with a different theme every year, this year with the title of ‘Global Agricultural Policies, Food and Energy’.

More than 1300 delegates came together at the congress, which featured more than 40 exhibition stands. In the event, which was closely monitored by sector representatives as well as economic circles, issues such as changing global agricultural policies, climate change, drought and new trade dynamics were discussed by experts in their fields. Grain and flour markets, world grain policies and technological transformations in production were discussed in depth at the congress.

‘TURKEY IS THE WORLD’S FLOUR WAREHOUSE’

In his speech at the congress, TUSAF Board Chairman Haluk Tezcan said that 2023 is a year of records for Turkey. Tezcan elaborated, stating, “In addition to the increase in our planting areas, we have reached 21.5 million tons of wheat production, which is the highest wheat production of the last 7 years. Nowadays, when food supply security is one of the biggest threats facing the world, in addition to having strong stocks, Turkey has started to export durum wheat through the Turkish Grain Board after a long time. Thus, we have given signals to the whole world that we will not worry about stocks in the future. Turkey proudly continues to be the world’s flour warehouse.”

In addressing the audience, Haluk Tezcan highlighted the robust presence of the flour industry in Turkey, revealing that there are a total of 598 flour factories spread across 69 cities in the country. He further expounded on the sector, stating, “These flour factories have a production capacity of approximately 38 million tons per year. Flour production is one of the most important fields of activity of the agricultural sector in the national economy. In addition, we are one of the most important stakeholders of the agricultural sector in terms of production, labor force, industry, environmental science and sustainability. The regional distribution of Turkey’s flour production capacity is generally in line with the regional distribution of the number of enterprises. If we succeed in raising our yield and quality to world standards with increasing production, we can crown our world flour export championship with our own wheat.”

Haluk Tezcan emphasized Turkey’s prominent standing in the international market within the flour industry, citing superior production technology and product quality. He elaborated, stating, “For the past decade, with steadfast support from our government and affiliated institutions, we have proudly held the title of the world’s leading flour exporter. Anticipating a continued upward trajectory, we project our export volume to reach 4 million tons by 2024. Our industry’s commitment to staying abreast of evolving technology has significantly contributed to our sustained success in global flour exports.”

TRANSFORMATIVE FUTURE FOR TURKISH GRAIN INDUSTRY 

Tezcan highlighted the sector’s alignment with technological advancements and its pivotal role in maintaining the top position in world flour exports. Addressing future initiatives, he stated, “In alignment with the Green Accord, we are poised to intensify our efforts in the upcoming years, focusing on enhancing quality, improving efficiency, and minimizing our carbon footprint. Through this transformative approach, we anticipate a noteworthy expansion in both the number and variety of our value-added products.”

TMO: NO PRICE REDUCTIONS ON GRAIN SALES AGENDA

During the opening session of the congress, Ahmet Güldal, Chairman of the Board of Directors and General Manager of the Turkish Grain Board (TMO), delivered substantial insights into global and Turkish grain production and trade. Güldal highlighted that global wheat production, which stood at 630 million tons annually in 2004, has surged by 160-170 million tons over the last two decades. He noted that the all-time record was achieved in 2022 with a yield of 804 million tons, while last year witnessed a 2 percent decrease in production, totaling 788 million tons. Güldal emphasized the reduction in closing stocks this season to 266 million tons, marking the lowest level in the past four seasons. 

A YEAR OF RECORDS IN GRAIN PRODUCTION

Güldal stated that Turkey experienced a bountiful year in grain production in 2023, announcing a wheat yield of 22 million tons. He shared that the production of milling wheat reached 17.7 million tons, marking the highest figure in the last 8 years, while durum wheat production of 4.3 million tons was the highest in the past 18 years. Güldal elaborated on achieving a record barley yield of 9.2 million tons, the highest in the last 17 years, and an all-time record in corn with 9 million tons. He highlighted that during this abundant season, TMO set a new record in this sector with purchases exceeding 13 million tons.

TMO General Manager Güldal emphasized that despite the intense purchases, TMO possesses the storage capacity necessary to securely preserve this crucial stock. “The TMO warehouses, along with licensed and rented storage facilities, amount to 16.5 million tons,” he stated.

GRAIN MARKETS OUTLOOK FOR 2024

Ahmet Güldal also provided insights into the forecast for global and Turkish wheat for the upcoming season. He mentioned that in Russia, the world’s leading wheat exporter, favorable conditions prevail with good soil moisture and rains, while in Ukraine, another significant producer, adequate snow cover and increasing soil moisture were noted, although cold weather in certain areas may pose risks to crop development. Güldal highlighted a decrease in wheat acreage in the US compared to last year, and in the European Union, adverse weather conditions such as cold temperatures in the north, excessive rainfall in central regions, and drought in the Mediterranean were observed. Particularly in France, he noted delays in durum wheat plantings due to unfavorable weather conditions, along with a decrease in planting areas. Based on the latest data, it is projected that global wheat production for the new season will increase by 11 million tons compared to last year, reaching 799 million tons. He emphasized that closing stocks for the 2024/25 season are estimated at 260 million tons, marking the lowest level in the past 6 years.

Ahmet Güldal noted that in Turkey, January precipitation increased by 25% compared to seasonal norms and by over 100% compared to January last year. “There has been an increase of more than 49-100% in all regions compared to last year. We expect wheat production in 2024 to be on par with that of 2023,” he said.

RISK FACTORS FOR GRAIN MARKETS

Commenting on the risk factors for grain markets, Güldal listed them as follows:

•  Decline in cultivation areas and carryover stocks globally
•  The ongoing Russia-Ukraine war
•  Attacks on ships in the Red Sea

At the conclusion of his address, Ahmet Güldal addressed the questions eagerly anticipated by the Turkish flour industrialists. Clarifying that there should be no expectation of discounts in TMO’s grain sales, he stated, “We do not have any plans for price reductions or selling below cost in the current season. There are no regulations in place. There will be no sales from stocks in inventory under the Inward Processing Regime (DIR).or forward sales. We closely monitor market stocks, with a significant portion of the country’s stocks managed within our organization.”

COMPLEXITIES IN UKRAINE’S GRAIN EXPORT SCENARIO

One of the most captivating sessions at the congress, titled ‘Global Grain Markets, Logistics and Trade’. Masha Belikova, a distinguished grain market expert affiliated with Fastmarkets Agriculture, delivered a comprehensive presentation shedding light on critical aspects of Ukranian grain and oilseeds production. “As we peer into the 2024/25 season, the clarity surrounding changes in winter crop planting remains elusive,” Belikova noted. The latest data from the Ukrainian Ministry, reflecting completion on 93.6% of areas by November 27, showed winter wheat covering 4.16 million hectares, winter barley at 559,000 hectares, and winter rapeseeds planted on 1.16 million hectares. Traders anticipate 100% completion, awaiting confirmation at the harvest’s conclusion. Looking forward to spring sowing, Belikova highlighted, “Estimates suggest an expansion in areas devoted to oilseeds, notably soybeans (+21%) and rapeseeds (+24%). Sunflower cultivation remains uncertain, with farmers deliberating whether to decrease or increase areas, though indications point toward a potential reduction.”

“The establishment of a Ukrainian humanitarian corridor has significantly elevated the export share through Black Sea ports to 70%, reaching volumes almost at pre-war levels,” she emphasized, “with 6.3 million metric tons exported in January.” Market speculations, as Belikova pointed out, indicate that ahead of the new harvest, Ukraine retains a surplus of approximately 13-16 million tons of corn, 5-7 million tons of wheat, and 0.6-1 million tons of barley available for export.

“Ukrainian grains are the cheapest in the world for now,” she stated. Despite freight rates stabilizing somewhat, they persist at a considerable premium compared to shipments from Russia and Romania. “Although confidence in importing grains from Ukraine has risen,” Belikova remarked, “buyers continue to seek discounts for Ukrainian origin, underlining lingering concerns about potential risks.”

“With current worldwide prices, there is concern that the next planting campaign will be even worse, as with stable freight, lower CIF, the producer again taking all the costs on its shoulders, while the last two seasons already were very difficult, with limited/absent margins,” she concluded.

PROJECTIONS FOR RUSSIA’S WHEAT MARKET

Dmitri Rylko, General Director of IKAR, presented an overview of Russia’s wheat and grain situation. Noting Russia’s record wheat export rate, Rylko projected a potential export of 19-19.5 million tons of wheat from Feb 15 to June 30, compared with 18.4 million last season. Russia’s 2024-25 wheat production is expected to reach at least 90 million tons, with exports potentially exceeding 50 million tons. Total grain production in Russia could reach 152 million tons, boasting an export potential of 70 million tons.

Rylko drew attention to the shifts in Russia’s wheat export destinations. Between 2016 and 2022, the share of exports to traditional destinations ranged from 62 to 70 percent on what he termed the “wheat meridian.” In the 2023-24 season, this share dropped to 56 percent, with record exports to Mexico, Brazil, Pakistan, Bangladesh, and Indonesia contributing to the change.

GCC’S GRAIN INDUSTRY DYNAMICS

Dr. Evgeniya Dudinova, Procurement Director of Agthia Group, provided a detailed review of the 2024 prospects for the grain import structure in the GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates ) and its neighboring regions. In the current scenario, most GCC countries consistently rely on grain imports from the Black Sea, with a notable market share originating from Russia. Saudi Arabia has emerged as one of the top five importers of Russian grains, surpassing 2 million metric tons since the commencement of the 2023/2024 season. This includes not only barley but also significant quantities of wheat.

Furthermore, both the UAE and Oman are poised to enhance their import shares, contingent upon favorable and competitive values from the Russian/Black Sea region, a trend expected to continue throughout 2024. Kuwait has experienced a notable surge in its import share of Black Sea barley, a shift from the previous dominance of Australian origin. Meanwhile, Pakistan has opted to halt the import of milling wheat, given the stabilization of local flour prices. India, on the other hand, has maintained a closed export door during this period.